<PAGE>
As filed with the Securities and Exchange Commission on March 5, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PEGASUS COMMUNICATIONS CORPORATION
--------------------------------------------------
(Exact name of issuer as specified in its charter)
Delaware 51-0374669
- ------------------------------- ------------------------
(state or other jurisdiction of (IRS Employer Indentifi-
incorporation or organization) cation Number)
c/o Pegasus Communications Management Company
Suite 454, 5 Radnor Corporate Center
100 Matsonford Road
Radnor, Pennsylvania 19087
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
PEGASUS COMMUNICATIONS SAVINGS PLAN
PEGASUS COMMUNICATIONS PUERTO RICO SAVINGS PLAN
-----------------------------------------------
(Full title of the plans)
Marshall W. Pagon, President and Chief Executive Officer
c/o Pegasus Communications Management Company
Suite 454, 5 Radnor Corporate Center
100 Matsonford Road
Radnor, Pennsylvania 19087
---------------------------------------------------------
(Name and address of agent for service)
(610) 341-1801
---------------------------------------
(Telephone number, including area code,
of agent for service)
Copy to:
Michael B. Jordan, Esq.
Drinker Biddle & Reath
1100 Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Titles of Amount Maximum Maximum
Securities To Be Offering Aggregate Amount of
To Be Regis- Price Offering Registration
Registered tered Per Share ** Price ** Fee**
- ---------- ------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Class A 205,000 $11.81 $2,421,050 $734
Common shares*
Stock,
par value
$.01 per
share
</TABLE>
* Represents 205,000 shares registered under the Pegasus Communications
Savings Plan and the Pegasus Communications Puerto Rico Savings Plan.
Pursuant to Rule 416(a), this Registration Statement also registers
such indeterminate number of additional shares as may become issuable
under the Plans in connection with share splits, share dividends or
similar transactions. In addition, pursuant to Rule 416(c), this
registration statement also covers an indeterminate amount of interests
to be offered or sold pursuant to the Pegasus Communications Savings
Plan and the Pegasus Communications Puerto Rico Savings Plan.
** Calculated pursuant to Rule 457(h). The price is computed based upon
$11.81, the average of the highest and lowest selling prices of the
Company's Class A Common Stock on February 26, 1997, as reported by the
Nasdaq National Market.
<PAGE>
PART I - INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
(Not required to be filed as part of this Registration Statement)
PART II - INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
Pegasus Communications Corporation (the "Company"), the
Pegasus Communications Savings Plan (the "Savings Plan") and the Pegasus
Communications Puerto Rico Savings Plan (the "Puerto Rico Savings Plan") hereby
incorporate into this Registration Statement by reference the following
documents:
1. The Prospectus from the Company's Registration
Statement on Form S-1 (File No. 333-18739) filed
pursuant to Rule 424(b)(4) under the Securities
Act of 1933, as amended (the "Securities Act"),
with the Securities and Exchange Commission on
January 23, 1997.
2. The Company's Reports on Form 8-K filed with the
Securities and Exchange Commission on October 22,
1996, November 25, 1996 and February 18, 1997.
3. The description of the Company's Common Stock which
is incorporated by reference into the Company's
Registration Statement on Form 8-A filed under the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on September 18, 1996, including any
amendment or report filed for the purpose of updating
such description.
All reports subsequently filed by the Company, the Savings
Plan and the Puerto Rico Savings Plan pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act after the date of the Registration Statement and prior
to the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for the purposes hereof to the extent that a
statement contained herein (or in any subsequently filed document which also is
incorporated by reference herein) modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part hereof.
R-1
<PAGE>
Item 4. Description of Securities.
Not applicable
Item 5. Interests of Named Experts and Counsel.
Michael B. Jordan, an Assistant Secretary of the Company, is a
partner in Drinker Biddle & Reath. Drinker Biddle & Reath is counsel to the
Company and assisted the Company in the preparation of this Registration
Statement.
Item 6. Indemnification of Directors and Officers.
The Company's Amended and Restated Certificate of
Incorporation provides that a director of the Company shall have no personal
liability to the Company or to its stockholders for monetary damages for breach
of fiduciary duty as a director except to the extent that Section 102(b)(7) (or
any successor provision) of the Delaware General Corporation Law, as amended
from time to time, expressly provides that the liability of a director may not
be eliminated or limited.
Article 6 of the Company's By-Laws provides that any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of the Company, or is or was serving while a director
or officer of the Company at the request of the Company as a director, officer,
employee, agent, fiduciary or other representative of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
shall be indemnified by the Company against expenses (including attorneys'
fees), judgments, fines, excise taxes and amounts paid in settlement actually
and reasonably incurred by such person in connection with such action, suit or
proceeding to the full extent permissible under Delaware law. Article 6 also
provides that any person who is claiming indemnification under the Company's
By-Laws is entitled to advances from the Company for the payment of expenses
incurred by such person in the manner and to the full extent permitted under
Delaware law.
Item 7. Exemption from Registration Claimed.
Not applicable.
R-2
<PAGE>
Item 8. Exhibits.
Exhibit 4(a) The Company's Certificate of Incorporation, as
amended (which is incorporated by reference to Exhibit
3.1 to the Company's Registration Statement on Form
S-1 (File No. 333-05057)).
Exhibit 4(b) Certificate of Designation, Preferences and Relative
Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and
Restrictions Thereof (which is incorporated by
reference to Exhibit 3.3 to the Company's Registration
Statement on Form S-1 (File No. 333-18739)).
Exhibit 4(c) The Company's Savings Plan, as amended by Amendment
No. 1 and Amendment No. 2.
Exhibit 4(d) The Company's Puerto Rico Savings Plan.
Exhibit 5(a) Opinion of Drinker Biddle & Reath
Exhibit 23(a) Consent of Coopers & Lybrand L.L.P.
Exhibit 23(b) Consent of Herbein + Company, Inc.
Exhibit 23(c) Consent of Ernst & Young LLP
Exhibit 23(d) Consent of Deloitte & Touche LLP
Exhibit 23(e) Consent of Drinker Biddle & Reath
(included in their opinion filed as
Exhibit 5(a)).
R-3
<PAGE>
Item 9. Undertakings.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant to Rule
424(b) if, in the aggregate, the changes in value and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" Table in the effective registration statement;
and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraph (i) and
(ii) do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE>
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
registrants' annual reports pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
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<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned thereunto
duly authorized, at Radnor, Pennsylvania, on this 5th day of March, 1997.
PEGASUS COMMUNICATIONS CORPORATION
By: /s/ Marshall W. Pagon
------------------------------------------
Marshall W. Pagon,
Chief Executive Officer and President
Each person whose signature appears below hereby constitutes
and appoints Marshall W. Pagon, Robert N. Verdecchio and Ted S. Lodge as his or
her attorneys-in-fact and agents, with full power of substitution and
resubstitution for him or her, in any and all capacities, to sign any or all
amendments or post-effective amendments to this Registration Statement, and to
file the same, with exhibits thereto and other documents in connection
therewith, granting unto each of such attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary in connection with such matters and hereby ratifying and confirming
all that each of such attorneys-in-fact and agents or his substitutes may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Marshall W. Pagon President, Chief March 5, 1997
- --------------------- Executive Officer
Marshall W. Pagon and Chairman of
(Principal the Board
Executive Officer)
R-6
<PAGE>
/s/ Robert N. Verdecchio Senior Vice March 5, 1997
- ------------------------ President, Chief
Robert N. Verdecchio Financial Officer
(Principal and Assistant
Financial and Secretary
Accounting
Officer)
/s/ James J. McEntee, III Director March 5, 1997
- -------------------------
James J. McEntee, III
/s/ Mary C. Metzger Director March 5, 1997
- -------------------------
Mary C. Metzger
/s/ Donald W. Weber Director March 5, 1997
- -------------------------
Donald W. Weber
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Administrator of the Pegasus Communications Savings Plan ("Savings Plan") has
duly caused this registration statement to be signed on behalf of the Savings
Plan by the undersigned, thereunder duly authorized, on March 5, 1997.
PEGASUS COMMUNICATIONS SAVINGS PLAN
By: /s/ Robert N. Verdecchio
-------------------------
Robert N. Verdecchio
Title: Member, Pegasus
Communications Savings Plan,
Savings Plan Committee
R-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Administrator of the Pegasus Communications Puerto Rico Savings Plan ("Puerto
Rico Savings Plan") has duly caused this registration statement to be signed on
behalf of the Puerto Rico Savings Plan by the undersigned, thereunder duly
authorized, on March 5, 1997.
PEGASUS COMMUNICATIONS PUERTO RICO SAVINGS PLAN
By: /s/ Robert N. Verdecchio
-------------------------
Robert N. Verdecchio
Title: Member, Pegasus Communications Puerto Rico
Savings Plan, Savings Plan Committee
R-9
<PAGE>
EXHIBIT INDEX
Description Number
- ----------- ------
Pegasus Communications Corporation
Savings Plan, as amended by
Amendment No. 1 and Amend-
ment No. 2 4(c)
Pegasus Communications Corporation
Puerto Rico Savings Plan 4(d)
Opinion of Drinker Biddle & Reath 5(a)
Consent of Coopers & Lybrand L.L.P. 23(a)
Consent of Herbein + Company, Inc. 23(b)
Consent of Ernst & Young LLP 23(c)
Consent of Deloitte & Touche LLP 23(d)
R-10
<PAGE>
PEGASUS COMMUNICATIONS
SAVINGS PLAN
(Effective January 1, 1996)
<PAGE>
PEGASUS COMMUNICATIONS PUERTO RICO
SAVINGS PLAN
(Effective January 1, 1996)
TABLE OF CONTENTS
Page
----
PREAMBLE.....................................................................1
Article I - DEFINITIONS......................................................1
1.1 "Account"......................................................1
1.2 "Accrued Benefit"..............................................1
1.3 "Adjustment Factor"............................................1
1.4 "Affiliate"....................................................1
1.5 "Before-Tax Contributions".....................................2
1.6 "Before-Tax Contributions Account".............................2
1.7 "Beneficiary"..................................................2
1.8 "Board of Directors"...........................................2
1.9 "Break in Service".............................................2
1.10 "Call Option"..................................................2
1.11 "Code".........................................................2
1.12 "Company"......................................................2
1.13 "Company Additional Contributions".............................2
1.14 "Company Account"..............................................2
1.15 "Company Matching Contributions"...............................2
1.16 "Disability"...................................................2
1.17 "Eligible Employee"............................................3
1.18 "Employee".....................................................3
1.19 "Employment Date"..............................................3
1.20 "ERISA"........................................................3
1.21 "Forfeitures"..................................................3
1.22 "Hour of Service"..............................................3
1.23 "Investment Funds".............................................5
1.24 "Leased Employee"..............................................5
1.25 "Limitation Compensation"......................................5
1.26 "Limitation Year"..............................................5
1.27 "Location Cash Flow"...........................................6
1.28 "Normal Retirement Age"........................................6
1.29 "Normal Retirement Date".......................................6
1.30 "Participant"..................................................6
1.31 "Participating Employer".......................................6
1.32 "Pegasus Stock"................................................6
1.33 "Pegasus Stock Fund"...........................................6
1.34 "Plan".........................................................6
1.35 "Plan Year"....................................................6
1.36 "Postponed Retirement Date"....................................6
1.37 "Reemployment Date"............................................6
1.38 "Right of First Refusal".......................................6
1.39 "Rollover Account".............................................6
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<PAGE>
1.40 "Rollover Matching Contributions"...............................7
1.41 "Salary"........................................................7
1.42 "Savings Plan Committee"........................................7
1.43 "Spouse" or "Surviving Spouse"..................................7
1.44 "Trust Agreement"...............................................8
1.45 "Trustees"......................................................8
1.46 "Trust Fund"....................................................8
1.47 "Valuation Date"................................................8
1.48 "Vested Interest"...............................................8
1.49 "Year of Eligibility Service"...................................8
1.50 "Year of Vesting Service".......................................8
1.51 "Year Over Year Increase in Company-Wide Location Cash Flow"....8
Article II - ELIGIBILITY AND PARTICIPATION....................................9
2.1 Eligibility.....................................................9
2.2 Application to Make Contributions...............................9
2.3 Rehired Employees..............................................10
2.4 Transfers......................................................10
2.5 Leased Employees...............................................11
Article III - CONTRIBUTIONS TO PARTICIPANTS' ACCOUNTS........................11
3.1 Amount of Before-Tax Contributions.............................11
3.2 Company Matching Contributions.................................11
3.3 Savings Plan Committee Alternatives............................12
3.4 Change in Amount of Before-Tax Contributions...................12
3.5 Suspension of Before-Tax Contributions.........................12
3.6 Resumption of Before-Tax Contributions.........................12
3.7 Company Additional Contributions...............................12
3.8 Allocation of Company Additional Contributions.................13
3.9 Rollover Matching Contributions................................13
3.10 Return of Contributions to Company.............................14
3.11 Paid Leave of Absence..........................................15
3.12 Rollover Contributions and Direct Transfers....................15
3.13 Vesting and Distribution of Rollover Account...................15
3.14 Profits Not Required...........................................15
Article IV - LIMITATIONS ON CONTRIBUTIONS....................................16
4.1 Definitions....................................................16
4.2 Limitation on Before-Tax Contributions.........................19
4.3 Limitations on Company Matching Contributions..................20
4.4 Distribution of Excess Deferrals...............................22
4.5 Distribution of Excess Contributions...........................23
4.6 Forfeiture or Distribution of Excess Aggregate Contributions...24
4.7 Limitation on Annual Additions to Participants' Accounts.......25
4.8 Disposition of Excess Annual Additions.........................27
Article V - VALUATION AND INVESTMENT OF PARTICIPANTS' ACCOUNTS...............28
5.1 Investment of Account Balance..................................28
5.2 Investment Funds...............................................28
5.3 Reinvestment...................................................29
5.4 Investment Fund Designations...................................29
5.5 Valuation of Investment Funds..................................30
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<PAGE>
5.6 Valuation of Participant's Account in Investment Funds........ 30
Article VI - ELIGIBILITY FOR BENEFITS....................................... 30
6.1 Normal Retirement Benefits.................................... 30
6.2 Postponed Retirement Benefits................................. 30
6.3 Termination Benefits.......................................... 30
6.4 Reemployment.................................................. 31
Article VII - DEATH BENEFITS................................................ 32
7.1 Designation of Beneficiary and Form of Payment of Death
Benefit....................................................... 32
7.2 Requirements for Spouse's Consent............................. 32
7.3 Payment of Benefits........................................... 33
Article VIII - VESTING...................................................... 33
8.1 Vested Interest in Before-Tax Contributions Account........... 33
8.2 Vested Interest in Company Account............................ 33
8.3 Forfeitures................................................... 34
8.4 No Divestment for Cause....................................... 34
Article IX - PAYMENT OF BENEFITS............................................ 34
9.1 Method of Payment............................................. 34
9.2 Form of Payment............................................... 34
9.3 Valuation of Accounts......................................... 34
9.4 Entitlement to Benefits....................................... 34
9.5 Requirements Concerning Distributions......................... 35
9.6 Participant's Consent to Distribution of Benefits............. 36
9.7 Direct Rollovers of Eligible Rollover Distributions Made
From This Plan................................................ 37
Article X - WITHDRAWALS..................................................... 38
10.1 General Rules for All Withdrawals............................. 38
10.2 Withdrawals On or After Attainment of Age 59-1/2.............. 38
10.3 Hardship Withdrawals of Before-Tax Contributions.............. 38
Article XI - LOANS.......................................................... 40
11.1 In General.................................................... 40
11.2 Amount........................................................ 40
11.3 Valuation..................................................... 40
11.4 Repayment..................................................... 40
11.5 Security...................................................... 41
11.6 Distribution of Benefits...................................... 41
11.7 Default....................................................... 41
11.8 Interest...................................................... 42
11.9 Administration................................................ 42
11.10 Earmarking.................................................... 42
Article XII - ALLOCATION OF FIDUCIARY RESPONSIBILITY........................ 43
12.1 Allocation.................................................... 43
12.2 Exclusive Responsibility...................................... 43
12.3 Co-Fiduciary Liability........................................ 43
12.4 Interest of Participants...................................... 44
12.5 Employment of Advisers........................................ 44
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<PAGE>
12.6 Standards of Fiduciary Conduct................................ 44
12.7 Limitation on Fiduciary Liability............................. 44
Article XIII - ADMINISTRATION............................................... 44
13.1 Savings Plan Committee........................................ 44
13.2 Quorum........................................................ 45
13.3 Administrative Rules.......................................... 45
13.4 Authority and Administrative and Professional Assistance...... 45
13.5 Decision of Savings Plan Committee............................ 45
13.6 Accounting.................................................... 45
13.7 Claims Procedure.............................................. 45
13.8 Compensation.................................................. 47
13.9 Plan Records.................................................. 47
13.10 Funding Policy................................................ 47
Article XIV - TRUST FUND.................................................... 47
14.1 Trust Agreement............................................... 47
14.2 Exclusive Benefit Rule........................................ 47
Article XV - AMENDMENT, TERMINATION, MERGER AND SUCCESSOR EMPLOYER.......... 48
15.1 Amendment..................................................... 48
15.2 Discontinuance and Termination................................ 48
15.3 Merger, Consolidation, or Transfer............................ 49
15.4 Successor Employer............................................ 49
Article XVI - TOP-HEAVY PROVISIONS.......................................... 50
16.1 Top-Heavy Definitions......................................... 50
16.2 Top-Heavy Rules............................................... 52
Article XVII - RELATING TO THE PARTICIPATING EMPLOYERS...................... 53
17.1 Participating Employers....................................... 53
17.2 Action by Board of Directors.................................. 53
Article XVIII - MISCELLANEOUS............................................... 54
18.1 Company Notification.......................................... 54
18.2 No Right to Employment........................................ 54
18.3 No Assignment or Alienation................................... 54
18.4 Unclaimed Benefits............................................ 54
18.5 Military Leave................................................ 54
18.6 Titles........................................................ 55
18.7 Pronouns; Number.............................................. 55
18.8 Facility of Payment........................................... 55
18.9 Expenses...................................................... 55
18.10 Savings Provision............................................. 55
18.11 Governing Law................................................. 55
Appendix A - Approved Investment Funds as of January 1, 1996................A-1
-iv-
<PAGE>
PEGASUS COMMUNICATIONS
SAVINGS PLAN
(Effective January 1, 1996)
PREAMBLE
WHEREAS, Pegasus Media & Communications, Inc. ("Pegasus")
desires to establish a profit sharing plan containing a cash or deferred
arrangement under section 401(k) of the Internal Revenue Code of 1986, as
amended, for its eligible employees;
NOW, THEREFORE, effective January 1, 1996, and subject to
approval by the District Director of Internal Revenue, Pegasus hereby
establishes the Pegasus Communications Savings Plan under the following terms
and conditions:
Article I
DEFINITIONS
In this Plan, unless a different meaning is plainly required
by the context, the following words and phrases, as used herein, shall have the
following meanings --
1.1 "Account" shall mean, as of any applicable date, the
aggregate of a Participant's Before-Tax Contributions Account, Company
Account, and Rollover Account.
1.2 "Accrued Benefit" shall mean the amount credited to a
Participant's Account under the Plan.
1.3 "Adjustment Factor" shall mean the cost-of-living
adjustment factor prescribed by the Secretary of the Treasury under section
415(d) of the Code, as applied to such items and in such manner as the Secretary
shall provide.
1.4 "Affiliate" shall mean the Company and any corporation
which is a member of a controlled group of corporations (as defined in section
414(b) of the Code) which includes the Company; any trade or business (whether
or not incorporated) which is under common control (as defined in section 414(c)
of the Code) with the Company; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in section 414(m)
of the Code) which includes the Company; and any other entity required to be
aggregated with the Company pursuant to regulations under section 414(o) of the
Code. For purposes of applying sections 414(b) and 414(c) of the Code to the
limitations set forth in Section 4.7, the phrase "more than 50 percent" shall be
substituted for the phrase "at least 80 percent" each place it appears in
section 1563(a)(1) of the Code.
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<PAGE>
1.5 "Before-Tax Contributions" shall mean those contributions
authorized by a Participant pursuant to Section 3.1. Before-Tax Contributions
shall be subject to the limitations described in Section 4.2.
1.6 "Before-Tax Contributions Account" shall mean the
sub-account established for the portion of a Participant's Account attributable
to his Before-Tax Contributions.
1.7 "Beneficiary" shall mean the person or legal entity
designated by the Participant to receive benefits payable under the Plan after
the Participant's death, or the personal or legal representative of a deceased
Participant. If no Beneficiary is designated by the Participant or if no
Beneficiary survives the Participant, the Beneficiary shall be the Participant's
Spouse if the Participant has a surviving Spouse; otherwise the Beneficiary
shall be the Participant's estate.
1.8 "Board of Directors" shall mean the Board of Directors of
Pegasus Media & Communications, Inc.
1.9 "Break in Service" shall mean a 12-month period beginning
on an Employee's Employment Date or Reemployment Date (as applicable) or an
anniversary thereof during which the Employee does not complete more than 500
Hours of Service.
1.10 "Call Option" shall mean the Company's right to call
Pegasus Stock in accordance with the document dated as of January 1, 1996, which
document is incorporated herein by reference.
1.11 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.12 "Company" shall mean Pegasus Media & Communications, Inc.
and any other Participating Employer.
1.13 "Company Additional Contributions" shall mean those
contributions made by the Company pursuant to Section 3.7.
1.14 "Company Account" shall mean the sub-account established
for the portion of a Participant's Account attributable to Company Additional
Contributions, Company Matching Contributions and Rollover Matching
Contributions.
1.15 "Company Matching Contributions" shall mean those
contributions made by the Company pursuant to Section 3.2.
1.16 "Disability" shall mean the inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or to be of long
continued or indefinite duration. The permanence and degree of such impairment
shall be supported by medical evidence satisfactory to the Savings Plan
Committee.
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<PAGE>
1.17 "Eligible Employee" shall mean an Employee of the Company
except for --
(a) the Chief Executive Officer of Pegasus Communications
Holdings, Inc.
(b) any Employee who is a member of a collective bargaining
unit, unless the members of the unit are eligible to become Participants in the
Plan pursuant to the terms of the unit's collective bargaining agreement with
the Company;
(c) any Leased Employee; and
(d) any non-resident alien who receives no earned income
(within the meaning of section 911(d)(2) of the Code) which constitutes United
States source income (within the meaning of section 861(a)(3) of the Code).
1.18 "Employee" shall mean anyone employed by the Company or
any other Affiliate and any Leased Employee.
1.19 "Employment Date" shall mean the date on which an
Employee completes his first Hour of Service.
1.20 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.21 "Forfeitures" shall mean the non-vested portion of the
Company Account that the Participant is not entitled to upon termination of
employment.
1.22 "Hour of Service" shall mean --
(a) (1) An "Hour of Service" is each hour for which an
Employee is paid, or entitled to payment, for the performance of duties for an
Affiliate.
(2) An "Hour of Service" is also each hour for which an
Employee is paid, or entitled to payment, by an Affiliate on account of a period
of time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or leave of
absence. Notwithstanding the preceding sentence --
(A) No more than 501 Hours of Service shall
be credited under this subsection (a)(2) to an Employee on
account of any single continuous period (whether or not the
period occurs in a single service computation period) during
which the Employee performs no duties;
(B) Hours of Service shall not be credited
under this subsection (a)(2) to an Employee for payments made
or due under a plan maintained solely for the purpose of
complying with
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any applicable workers' compensation, unemployment
compensation or disability insurance law;
(C) Hours of Service shall not be credited
under this subsection (a)(2) to an Employee for any payment
which solely reimburses him for medical or medically related
expenses he has incurred; and
(D) Hours of Service shall not be credited
under this subsection (a)(2) to an Employee for any payments
made or due to him under this Plan or any other plan of
deferred compensation which is maintained by an Affiliate.
(3) An "Hour of Service" is also each hour for which back
pay, irrespective of mitigation of damages, is either awarded or agreed to by an
Affiliate, provided that the same Hours of Service shall not be credited under
subsection (a)(1) or subsection (a)(2) above and under this subsection (a)(3).
(b) Solely for the purpose of determining whether an Employee
has incurred a Break in Service, "Hour of Service" shall also include the
following hours --
(1) An Employee shall receive credit for each
additional hour which is part of his customary work week
during which he is on an unpaid leave of absence authorized by
an Affiliate under its standard personnel practices, provided
the Employee resumes employment with an Affiliate upon the
expiration of such leave.
(2) Effective for absences from work which begin on
or after January 1, 1985, an Employee who is absent from work
for maternity or paternity reasons shall receive credit for
the Hours of Service which would otherwise have been credited
to such Employee but for such absence, or in any case in which
such Hours of Service cannot be determined, eight Hours of
Service per day of such absence. The total number of hours
treated as Hours of Service under this paragraph (2) for any
absence from work for maternity or paternity reasons, when
aggregated with any hours credited under any other provision
of this Section which relate to the same absence, shall not
exceed 501. An absence from work for maternity or paternity
reasons means a continuous absence --
(A) by reason of the pregnancy of the
Employee;
(B) by reason of the birth of a child of the
Employee;
(C) by reason of the placement of a child
with the Employee in connection with the adoption of
the child by the Employee; or
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(D) for purposes of caring for the child for
a period beginning immediately following such birth
or placement.
The Hours of Service credited under this paragraph (2) shall
be credited in the service computation period in which the
absence begins if the crediting is necessary to prevent a
Break in Service in that service computation period, or, in
all other cases, in the following service computation period.
(c) In the case of a payment which is made or due on account
of a period during which an Employee performs no duties, and which results in
the crediting of Hours of Service under subsection (a)(2) above, or in the case
of an award or agreement for back pay, to the extent that such award or
agreement is made with respect to a period described in subsection (a)(2) above,
the number of Hours of Service to be credited shall be determined in accordance
with the applicable regulations prescribed by the Secretary of Labor and set
forth in 29 CFR ss. 2530.200b-2(b).
(d) Hours of Service described in subsections (a)(1), (a)(2)
and (a)(3) above shall be credited to service computation periods in accordance
with the applicable regulations prescribed by the Secretary of Labor and set
forth in 29 CFR ss. 2530.200b-2(c).
(e) For purposes of determining Years of Vesting Service and
eligibility for Company Matching Contributions and Company Additional
Contributions, an Employee shall receive credit for Hours of Service with an
Affiliate only to the extent that such Hours are completed during the period
that the employer for whom the services are performed is an Affiliate.
1.23 "Investment Funds" shall mean the funds made available by
the Savings Plan Committee under the Trust Fund pursuant to Section 5.2.
1.24 "Leased Employee" shall mean a leased employee of an
Affiliate, within the meaning of section 414(n)(2) of the Code. Notwithstanding
the foregoing, if all such leased employees constitute less than 20 percent of
the nonhighly compensated work force (within the meaning of section
414(n)(5)(C)(ii) of the Code) of the Affiliates, the term "Leased Employee"
shall not include any leased employee covered by a plan maintained by the
employer of the leased employee described in section 414(n)(5) of the Code.
1.25 "Limitation Compensation" shall mean a Participant's
Salary for a Limitation Year, except that (i) the $150,000 limit (as adjusted by
the Commissioner of Internal Revenue for increases in the cost of living
pursuant to section 401(a)(17)(B) of the Code) shall be disregarded, and (ii)
contributions (if any) made by the Company on behalf of the Participant, by
salary reduction pursuant to the Participant's election, to an arrangement
described in section 401(k) of the Code and to a "cafeteria plan" (as defined in
section 125(d) of the Code) shall be excluded.
1.26 "Limitation Year" shall mean the Plan Year.
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1.27 "Location Cash Flow" shall mean income from Company
operations before management fees, depreciation, amortization (other than
amortization of film contracts), and incentive compensation (including
contributions under the Plan).
1.28 "Normal Retirement Age" shall mean age 65.
1.29 "Normal Retirement Date" shall mean the first day of the
month coincident with or next following a Participant's attainment of Normal
Retirement Age.
1.30 "Participant" shall mean an Eligible Employee who has met
the requirements for participation in the Plan as provided in Article II, or a
former Employee with an undistributed Vested Interest.
1.31 "Participating Employer" shall mean an Affiliate which
has adopted the Plan and become a participating employer in the Plan pursuant to
Article XVII.
1.32 "Pegasus Stock" shall mean class B non-voting common
stock of Pegasus Communications Holdings, Inc.
1.33 "Pegasus Stock Fund" shall mean the Investment Fund
maintained by the Trustees within the Trust to hold Pegasus Stock pursuant to
Section 5.2.
1.34 "Plan" shall mean the Pegasus Communications Savings
Plan, a profit sharing plan under section 401(a)(27) of the Code, as set forth
in this document and as it may be amended from time to time.
1.35 "Plan Year" shall mean each 12-consecutive-month period
commencing on January 1 and ending on December 31.
1.36 "Postponed Retirement Date" shall mean the first day of
any calendar month after a Participant's Normal Retirement Date and coinciding
with or first following his actual retirement from the Company and all
Affiliates.
1.37 "Reemployment Date" shall mean the date on which an
Employee completes his first Hour of Service following his most recent Break in
Service.
1.38 "Right of First Refusal" shall mean the Company's right
of first refusal with respect to Pegasus Stock in accordance with the document
dated as of January 1, 1996, which document is incorporated herein by reference.
1.39 "Rollover Account" shall mean the sub-account established
for the portion of a Participant's Account attributable to a rollover amount
described in Section 3.12.
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1.40 "Rollover Matching Contributions" shall mean those
contributions made by the Company pursuant to Section 3.9.
1.41 "Salary" shall mean the amount reported for a Plan Year
by the Company in Box 1 of the Participant's Form W-2 (Wage and Tax Statement)
and any successor thereto. Such amount is described in more detail as follows:
the sum of (i) a Participant's wages for the calendar year within the meaning of
section 3401(a) of the Code, plus (ii) all other payments to the Participant by
the Company (in the course of the Company's trade or business) for the calendar
year, in both cases for which the Company is required to furnish the Participant
a written statement under section 6041(d), 6051(a)(3), or 6052 of the Code. A
Participant's Salary shall be determined without regard to any rules under
section 3401(a) of the Code that limit the remuneration included in wages based
on the nature or location of the employment or the services performed.
"Salary" shall also include contributions made by the Company
on behalf of the Participant, by salary reduction pursuant to the Participant's
election, (i) to an arrangement described in section 401(k) of the Code, and
(ii) to a "cafeteria plan" (as defined in section 125(d) of the Code).
The annual Salary of each Participant taken into account for
determining all benefits provided under the Plan shall not exceed $150,000, as
adjusted by the Commissioner of Internal Revenue for increases in the cost of
living pursuant to section 401(a)(17)(B) of the Code. The cost-of-living
adjustment in effect for a calendar year shall apply to any period, not
exceeding 12 months, beginning in such calendar year over which Salary is
determined (the "determination period"). If a determination period consists of
fewer than 12 months, the applicable limit (as adjusted) shall be multiplied by
a fraction, the numerator of which is the number of months in the determination
period, and the denominator of which is 12.
For purposes of the limit set forth above, the Salary of a
Participant who is a "5-percent owner" (as defined in section 414(q)(1)(A) of
the Code), or one of the 10 "highly compensated employees" (as defined in
section 414(q) of the Code) paid the greatest remuneration during a Plan Year,
shall include the Salary of each member of the Participant's "family," as
provided in section 414(q)(6) of the Code, except that in applying such rules,
the term "family" shall include only the Spouse of the Participant and any
lineal descendants of the Participant who have not attained age 19 before the
close of the Plan Year. If, as a result of the application of such rules, the
adjusted $150,000 limit is exceeded, then the limit shall be prorated among the
affected individuals in proportion to each individual's Salary as determined
under this Section prior to the application of the limit.
1.42 "Savings Plan Committee" shall mean the committee
appointed to administer the Plan pursuant to Article XIII.
1.43 "Spouse" or "Surviving Spouse" shall mean the spouse or
surviving spouse of a Participant, provided that a former spouse shall be
treated as the spouse or surviving spouse to the extent provided under a
qualified domestic relations order (as defined in section 414(p) of the Code).
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1.44 "Trust Agreement" shall mean the agreement entered into
between the Company and the Trustees to set up a trust to carry out the purposes
of the Plan.
1.45 "Trustees" shall mean the Trustees appointed under the
Trust Agreement.
1.46 "Trust Fund" shall mean the assets held in trust for Plan
purposes under the Trust Agreement, including those invested in group annuity or
insurance contracts.
1.47 "Valuation Date" shall mean the date as of which the
Investment Funds are valued and Account balances determined under Article V,
which shall be each business day.
1.48 "Vested Interest" shall mean the portion of a
Participant's Account which is or has become nonforfeitable under Article VIII.
1.49 "Year of Eligibility Service" shall mean each successive
12-month period from an Employee's Employment or Reemployment Date during which
he completes at least 1,000 Hours of Service. For purposes of determining Years
of Eligibility Service, an Employee shall receive credit for an Hour of Service
notwithstanding the fact that such Hour was completed with an employer prior to
the date the employer became an Affiliate by acquisition or otherwise.
1.50 "Year of Vesting Service" shall mean each year from an
Employee's Employment or Reemployment Date during which he completes at least
1,000 Hours of Service. All of an Employee's Years of Vesting Service shall be
taken into account for purposes of determining his Vested Interest under the
Plan, except that Years of Vesting Service completed before a Break in Service
shall not be taken into account if the Employee had no Vested Interest when the
Break in Service occurred, and if the number of consecutive Breaks in Service
equals or exceeds the greater of (i) the number of his Years of Vesting Service
prior to the Breaks in Service, or (ii) five years.
1.51 "Year Over Year Increase in Company-Wide Location Cash
Flow" shall mean an amount determined as follows:
(a) In General. Except as provided in subsection (b) and
subsection (c) below, the Year Over Year Increase in Company-Wide Location Cash
Flow with respect to any year shall equal the excess of the Company-wide
Location Cash Flow for such year over the Company-wide Location Cash Flow for
the preceding year. The Year Over Year Increase in Company-Wide Location Cash
Flow shall be determined on a pro forma basis by the Board of Directors or a
committee thereof.
(b) Participating Employer Commences Participation. For
purposes of determining the excess of the Company-wide Location Cash Flow for a
year in which an employer first becomes a Participating Employer over the
Company-wide Location Cash Flow for the preceding year, the Location Cash Flow
attributable to such an employer in the year it first becomes a Participating
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Employer shall not be taken into account. However, such Location Cash Flow shall
be taken into account in determining the Year Over Year Increase in Company-Wide
Location Cash Flow for the year after the year in which the employer first
becomes a Participating Employer.
(c) Participating Employer Ceases Participation. With respect
to an employer who ceases to be a Participating Employer, the Location Cash Flow
attributable to such an employer in the year of such cessation and in the year
preceding such cessation shall not be taken into account for purposes of
determining (i) the excess of the Company-wide Location Cash Flow for the year
of such cessation over the Company-wide Location Cash Flow for the year
preceding such cessation, and (ii) the excess of the Company-wide Location Cash
Flow for the year of such cessation over the Company-wide Location Cash Flow for
the year immediately following such cessation.
Article II
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility. An Eligible Employee whose Employment Date is
before January 1, 1996 shall become a Participant in the Plan on January 1,
1996. An Eligible Employee whose Employment Date is on or after January 1, 1996
shall become a Participant in the Plan on the first day of the first calendar
quarter coincident with or next following the date he completes one Year of
Eligibility Service.
2.2 Application to Make Contributions. An Eligible Employee
who is scheduled to become a Participant under Section 2.1 shall complete a form
provided by the Company in order --
(a) to authorize regular payroll reduction contributions and
indicate the amounts under Article III;
(b) to make an Investment Fund designation(s) under Section
5.1;
(c) to name a Beneficiary under Section 7.1; and
(d) to establish a legally binding salary reduction agreement.
The form described above shall provide that if the Savings
Plan Committee determines that all or any part of the amount elected by the
Participant as Before-Tax Contributions may not be contributed to the Trust
because of the limitations set forth in Article IV, the Company shall not be
required to make such contributions to the Trust, and instead shall pay the
amount which is not contributed directly to the Participant as additional
taxable compensation. If a Participant is transferred to employment with the
Company or an Affiliate which is not covered by the Plan, or if he separates
from service, his salary reduction agreement shall automatically terminate.
The Participant's first Before-Tax Contributions deposit shall
be made from the first payroll period beginning in the calendar quarter
beginning after he submits the form described above, provided the form is
received by
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the Savings Plan Committee or its delegate at least 15 calendar days before the
first day of that calendar quarter.
The Savings Plan Committee shall keep, for each Participant, a
Participant's Account showing his interest and other relevant data under the
Plan and in the Trust Fund. Each Participant shall receive a written statement
of his Account quarterly and upon any distribution to him. In keeping these
Accounts, the Savings Plan Committee shall rely on the Trust Fund valuations
under the terms of the Plan and Trust Agreement.
2.3 Rehired Employees. If an Employee (whether or not he has
become a Participant) who has no Vested Interest terminates employment and
incurs a Break in Service, and if the number of consecutive Breaks in Service
equals or exceeds the greater of (i) the number of his Years of Eligibility
Service prior to the Breaks in Service, or (ii) five years, then, in the event
he is rehired, he shall be treated as a new Employee for all purposes of the
Plan.
In all other cases where an Employee leaves the Company after
becoming a Participant and is later rehired, he shall again become a Participant
on his Reemployment Date and may make contributions under the Plan pursuant to
Section 2.2, treating his Reemployment Date as though it were the first day of a
calendar quarter, provided the form described in Section 2.2 is received as part
of his reemployment process.
In all other cases where an Employee leaves the Company before
becoming a Participant and is later rehired, he shall become a Participant under
the provisions of Section 2.1, counting his Year(s) of Eligibility Service (if
any) completed before he left the Company.
2.4 Transfers
(a) Transfer from Covered Employment. If a Participant is
transferred from employment as an Eligible Employee to other employment with the
Company, or to employment with an Affiliate which has not adopted the Plan, he
shall not thereby incur a Break in Service, and his subsequent Years of Vesting
Service with the Company shall be taken into account for purposes of vesting in
his Company Account which he accrued under the Plan prior to the transfer; but
he shall not be entitled to have any additional contributions made on his behalf
to his Account under the Plan after the transfer.
(b) Transfer to Covered Employment. If an Employee is
transferred from employment with the Company which is not covered by the Plan,
or from employment with an Affiliate which has not adopted the Plan, to
employment as an Eligible Employee, his Years of Eligibility Service prior to
such transfer shall be taken into account in determining his eligibility to
participate. If such transferred Employee satisfies the service requirements of
this Article, he shall commence participation in the Plan immediately upon his
transfer to employment as an Eligible Employee.
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2.5 Leased Employees. Notwithstanding any other provisions of
the Plan, for purposes of determining the number or identity of Highly
Compensated Employees (as defined in Section 4.1) and for purposes of the
pension requirements of section 414(n)(3) of the Code, the employees of the
Company and Affiliates shall include Leased Employees. However, a Leased
Employee shall not become a Participant of, or accrue benefits under, the Plan.
Article III
CONTRIBUTIONS TO PARTICIPANTS' ACCOUNTS
3.1 Amount of Before-Tax Contributions. Effective as of the
February 15, 1996 payday, each Participant may direct the Company to make
Before-Tax Contributions on his behalf by notifying the Company pursuant to
Section 2.2 and authorizing the reduction of his Salary by a whole percentage of
two percent to a maximum of six percent. Before-Tax Contributions shall be
subject to the limitations of Article IV. The Before-Tax Contributions shall be
credited to the Participant's Before-Tax Contributions Account.
3.2 Company Matching Contributions
(a) Participants Eligible for Company Matching Contributions.
Company Matching Contributions to the Plan for a Plan Year shall be made on
behalf of each Participant (i) who has authorized contributions under Section
3.1 and who has elected under Section 5.1 that all or any part of his Before-
Tax Contributions for the Plan Year be invested in the Pegasus Stock Fund at the
time of their initial contribution to the Plan, (ii) who in the Plan Year
completed 1,000 or more Hours of Service for the Company, and (iii) who was an
Employee of the Company on the last day of the Plan Year. Notwithstanding the
preceding clauses (ii) and (iii), a Participant or his Beneficiary, as the case
may be, shall be entitled to a Company Matching Contribution on his behalf for
the Plan Year in which the Participant's employment terminates on or after his
Normal Retirement Date, terminates because of death, or terminates by reason of
Disability, regardless of whether the Participant was an Employee of the Company
on the last day of the Plan Year.
(b) Amount and Form of Company Matching Contributions
(1) Amount. The Company shall contribute to the Trust --
on behalf of each Participant who has authorized Before-Tax Contributions under
Section 3.1 -- an amount that, at the time of contribution, equals 100 percent
of the cash amount of such Before-Tax Contributions that are, pursuant to the
Participant's election under Section 5.1, invested in the Pegasus Stock Fund at
the time of their initial contribution to the Plan. Past Before-Tax
Contributions that are reapportioned from another Investment Fund to the Pegasus
Stock Fund and current Before-Tax Contributions that are initially invested in
an Investment Fund other than the Pegasus Stock Fund shall not be matched by the
Company to any extent. Company contributions made pursuant to this subsection
(b) shall be reduced by Forfeitures.
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(2) Form. Company Matching Contributions shall be made
either in the form of Pegasus Stock or in cash and used to purchase Pegasus
Stock, and shall be credited to the Participant's Company Account. If made in
Pegasus Stock, the value of such Pegasus Stock at the time of contribution shall
equal the cash amount of the Participant's Before-Tax Contributions that are
described in the first sentence of paragraph (1) above. Company Matching
Contributions shall be held in the Pegasus Stock Fund, and shall be subject to
the limitations of Section 4.3.
(c) Time of Contributions. The Company Matching Contributions
for each Plan Year shall be paid to the Trustees no later than the due date
(including extensions of time) for filing the Company's federal income tax
return for the Company's taxable year coincident with the Plan Year.
3.3 Savings Plan Committee Alternatives. The Savings Plan
Committee shall monitor periodically the level of Participants' Before-Tax
Contributions to lessen the likelihood of a violation of the limitations of
Section 4.2. If the Savings Plan Committee determines that on the basis of
current levels of Before-Tax Contributions, the limitations of Section 4.2 would
be violated for any Plan Year, the Savings Plan Committee may make such
adjustments for the remainder of the Plan Year in the percentage of one or more
Participants' Salary that can be designated as Before-Tax Contributions as the
Savings Plan Committee in its discretion deems necessary to prevent such a
violation.
3.4 Change in Amount of Before-Tax Contributions. Once a
calendar quarter, a Participant may change the amount of his Before-Tax
Contributions by giving 15 days' written notice to the Company before the start
of the calendar quarter when the change will be effective.
3.5 Suspension of Before-Tax Contributions. Once a calendar
quarter, a Participant may suspend his Before-Tax Contributions, by giving 15
days' prior written notice to the Company.
3.6 Resumption of Before-Tax Contributions. A Participant
whose Before-Tax Contributions have been suspended under Section 3.5 may resume
making Before-Tax Contributions effective the first payroll period beginning in
any calendar quarter by giving 15 days' written notice to the Company before the
start of the calendar quarter when the resumption will be effective.
3.7 Company Additional Contributions
(a) Amount. The Company may, in the sole discretion of its
Board of Directors, contribute to the Plan, for each Plan Year, a percentage of
the Year Over Year Increase in Company-Wide Location Cash Flow. The amount of
the Company's contribution to the Plan shall be determined for such Plan Year by
the Board of Directors or a Committee thereof. However, the amount of Company
Additional Contributions for any Plan Year shall not exceed the lesser of --
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(1) the amount allowable as a deduction for computing
federal income tax under the applicable provisions of the Code for the
Company's taxable year which includes the last day of such Plan Year;
or
(2) the limitations of Section 4.7.
(b) Time of Contributions. Company Additional Contributions
(if any) for any Plan Year shall be paid to the Trustees no later than the due
date (including extensions of time) for filing the Company's federal income tax
return for the Company's taxable year coincident with the Plan Year.
3.8 Allocation of Company Additional Contributions
(a) Participants Entitled to Allocation. Company Additional
Contributions to the Plan for a Plan Year shall be allocated to the Company
Account of each Participant (i) who in the Plan Year completed 1,000 or more
Hours of Service for the Company, and (ii) who was an Employee of the Company on
the last day of the Plan Year. Notwithstanding the preceding clause (ii), a
Participant or his Beneficiary, as the case may be, shall be entitled to an
allocation for the Plan Year in which the Participant's employment terminates on
or after his Normal Retirement Date, or because of death or by reason of
Disability, regardless of whether the Participant was an Employee of the Company
on the last day of the Plan Year.
(b) Allocation Method. As of December 31 of each Plan Year for
which the Company makes Company Additional Contributions, such Company
Additional Contributions shall be allocated to the Company Account of each
Participant entitled to an allocation for the Plan Year under subsection (a)
above in the same proportion that the Participant's Salary for the Plan Year
bears to the total Salary of all Participants entitled to an allocation for the
Plan Year.
3.9 Rollover Matching Contributions
(a) Participants Eligible for Rollover Matching Contributions.
Rollover Matching Contributions to the Plan for a Plan Year shall be made on
behalf of each Nonhighly Compensated Employee (as defined in Section 4.1(r)) (i)
who has made a rollover contribution (as defined in Section 3.12(b)) in such
Plan Year, (ii) who has elected under Section 5.1 that all or any part of such
rollover contribution be invested in the Pegasus Stock Fund at the time of
initial contribution to the Plan, (iii) who in the Plan Year completed 1,000 or
more Hours of Service for the Company, and (iv) who was an Employee of the
Company on the last day of the Plan Year. Notwithstanding the preceding clauses
(iii) and (iv), a Participant or his Beneficiary, as the case may be, shall be
entitled to a Rollover Matching Contribution on his behalf for the Plan Year in
which the Participant's employment terminates on or after his Normal Retirement
Date, terminates because of death, or terminates by reason of Disability,
regardless of whether the Participant was an Employee of the Company on the last
day of the Plan Year.
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(b) Amount and Form of Rollover Matching Contributions
(1) Amount. The Company shall contribute to the Trust --
on behalf of each Participant who has made a rollover contribution (as defined
in Section 3.12(b)) and is entitled to a Rollover Matching Contribution under
subsection (a) above -- an amount that, at the time of contribution, equals 100
percent of the cash amount of such rollover contribution that is, pursuant to
the Participant's election under Section 5.1, invested in the Pegasus Stock Fund
at the time of initial contribution to the Plan. However, the amount of Rollover
Matching Contributions for any Plan Year shall not exceed the lesser of --
(A) the amount allowable as a deduction for computing
federal income tax under the applicable provisions of the Code
for the Company's taxable year which includes the last day of
such Plan Year; or
(B) the limitations of Section 4.7.
Past rollover contributions that are reapportioned from another Investment Fund
to the Pegasus Stock Fund and current rollover contributions that are initially
invested in an Investment Fund other than the Pegasus Stock Fund shall not be
matched by the Company to any extent. Company contributions made pursuant to
this subsection (b) shall be reduced by Forfeitures.
(2) Form. Rollover Matching Contributions shall be made
either in the form of Pegasus Stock or in cash and used to purchase Pegasus
Stock, and shall be credited to the Participant's Company Account. If made in
Pegasus Stock, the value of such Pegasus Stock at the time of contribution shall
equal the cash amount of the Participant's rollover contribution that is
described in the first sentence of paragraph (1) above.
(c) Time of Contributions. The Rollover Matching Contributions
for each Plan Year shall be paid to the Trustees no later than the due date
(including extensions of time) for filing the Company's federal income tax
return for the Company's taxable year coincident with the Plan Year.
3.10 Return of Contributions to Company. All contributions
made hereto and income derived from assets held hereunder are held in trust for
the benefit of Participants and their Beneficiaries. It shall be impossible at
any time for any part of the corpus or income of the Plan to be used for, or
diverted to, purposes other than the exclusive benefit of Participants and their
Beneficiaries, except --
(a) If the Internal Revenue Service initially determines that
the Plan, as applied to any Participating Employer, does not meet the
requirements of a "qualified plan" under section 401(a) of the Code, the assets
of the Trust Fund attributable to contributions made by that employer under the
Plan shall be returned to that employer within one year of the date of denial of
qualification of the Plan as applied to that employer.
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(b) Any contribution made to this Plan by the Company because
of a mistake of fact may be returned to the Company within one year after such
contribution is made.
(c) All contributions made hereto are conditioned on
deductibility by the Company for its federal income tax purposes and, to the
extent such deduction is disallowed by the Internal Revenue Service, the amount
disallowed may be returned to the Company within one year after such
disallowance.
3.11 Paid Leave of Absence. If a Participant is on a paid
leave of absence, he may either continue to make Before-Tax Contributions or
suspend such Contributions during his absence.
3.12 Rollover Contributions and Direct Transfers
(a) Crediting of Rollover Contributions. A "rollover
contribution" (as defined in subsection (b) below) may be made by or on behalf
of any Participant, with the approval of the Savings Plan Committee. The Trustee
shall credit the amount of any rollover contribution to the Participant's
Rollover Account, a separate sub-account established by the Trustee in the
Participant's Account, as of the date the rollover contribution is made. A
rollover contribution shall be fully vested on the date of contribution. The
limitations of Section 4.7 shall not apply to rollover contributions. All
rollover contributions shall be in cash and/or other property acceptable to the
Trustee.
(b) Definition of "Rollover Contribution." The term "rollover
contribution" shall mean (i) the contribution of an "eligible rollover
distribution" (as defined in Section 9.7(b)(1)) to the Trustee by a Participant
on or before the 60th day immediately following the day the contributing
Participant receives the eligible rollover distribution, or (ii) the direct
payment of an eligible rollover distribution from a qualified trust described in
section 401(a) of the Code to the Trustee, pursuant to section 401(a)(31) of the
Code.
(c) Direct Transfers Otherwise Prohibited. Except as otherwise
provided in this Section, no direct transfers to the Plan shall be permitted.
3.13 Vesting and Distribution of Rollover Account
(a) A Participant shall be fully vested at all times in his
Rollover Account.
(b) A Participant's Rollover Account shall be distributed as
otherwise provided under the Plan.
3.14 Profits Not Required. The Company shall make payment of
Before-Tax Contributions, Company Matching Contributions, Company Additional
Contributions, and Rollover Matching Contributions without regard to its current
or accumulated earnings and profits.
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Article IV
LIMITATIONS ON CONTRIBUTIONS
4.1 Definitions. The following definitions shall apply for
purposes of this Article --
(a) "Actual Contribution Percentage" shall mean the average
(expressed as a percentage) of the Actual Contribution Ratios of the Eligible
Participants in a group. The Actual Contribution Percentage shall be calculated
to the nearest 1/100 of one percent.
(b) "Actual Contribution Ratio" shall mean the ratio
(expressed as a percentage) of the sum of the Contribution Amounts under the
Plan on behalf of an Eligible Participant for the Plan Year to the Eligible
Participant's Salary for the Plan Year. An Eligible Participant's Actual
Contribution Ratio shall be calculated to the nearest 1/100 of one percent.
(c) "Actual Deferral Percentage" shall mean the average
(expressed as a percentage) of the Actual Deferral Ratios of the Eligible
Participants in a group. The Actual Deferral Percentage shall be calculated to
the nearest 1/100 of one percent.
(d) "Actual Deferral Ratio" shall mean the ratio (expressed as
a percentage) of the Deferral Amounts on behalf of an Eligible Participant for
the Plan Year to the Eligible Participant's Salary for the Plan Year. An
Eligible Participant's Actual Deferral Ratio shall be calculated to the nearest
1/100 of one percent.
(e) "Annual Addition" shall mean the amount allocated to a
Participant's Account for a Limitation Year that consists of (i) Company
Matching Contributions, (ii) Company Additional Contributions, (iii) Before-Tax
Contributions (other than Excess Deferrals distributed pursuant to Section 4.4),
(iv) Rollover Matching Contributions, (v) Forfeitures, and (vi) amounts
described in sections 415(l)(1) and 419A(d)(2) of the Code.
(f) "Contribution Amounts" shall mean the Company Matching
Contributions, other than those forfeited under Section 4.4(a) or Section
4.5(a), made with respect to an Eligible Participant in a Plan Year. Rollover
Matching Contributions shall not be taken into consideration in determining
Contribution Amounts.
(g) "Deferral Amounts" shall mean the Before-Tax Contributions
made with respect to an Eligible Participant in a Plan Year.
(h) "Defined Contribution Dollar Limitation" shall mean
$30,000, as adjusted by the Secretary of the Treasury pursuant to section 415(d)
of the Code.
(i) "Determination Year" means the Plan Year for which a
determination of which Employees are Highly Compensated Employees is being made.
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(j) "Eligible Participant" shall mean an Employee who has met
the eligibility requirements of Article II and who is eligible to have Before-
Tax Contributions made to the Plan on his behalf for the Plan Year and, should
he elect to have Before-Tax Contributions made to the Plan on his behalf
initially invested in the Pegasus Stock Fund, to have Company Matching
Contributions allocated to his Company Account for the Plan Year.
(k) "Excess Aggregate Contributions" shall mean the amount
described in section 401(m)(6)(B) of the Code.
(l) "Excess Contributions" shall mean, with respect to any
Plan Year, the excess of --
(1) the aggregate Deferral Amounts of Highly Compensated
Employees for such Plan Year, over
(2) the maximum amount of Before-Tax Contributions
permitted by the Actual Deferral Percentage test under Section 4.2(b)
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of Actual Deferral Ratios, beginning with the highest of such
Ratios).
(m) "Excess Deferrals" shall mean the Before-Tax Contributions
for a calendar year that the Participant allocates to this Plan pursuant to the
claims procedure set forth in Section 4.4(b).
(n) "Family Member" shall mean an Employee who is, during a
particular Determination Year or Look-Back Year, a spouse or lineal ascendant or
descendent, or the spouse of the lineal ascendant or descendent, of either --
(1) a five percent owner who is an active or former
Employee, or
(2) a Highly Compensated Employee who is one of the 10
most highly paid Employees ranked on the basis of Salary paid by the Affiliates
during the applicable year.
(o) "Highly Compensated Employee" shall mean an Employee
described in either paragraph (1) below or paragraph (2) below.
(1) Look-Back Year. An Employee is a Highly Compensated
Employee if the Employee performs services during the Determination Year and the
Employee --
(A) was a five percent owner (as defined in section
416(i) of the Code) at any time during the Look-Back Year;
(B) received "compensation" (as defined in section
414(q)(7) of the Code) in excess of $75,000, multiplied by the Adjustment
Factor, during the Look-Back Year;
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(C) received "compensation" (as defined in section
414(q)(7) of the Code) in excess of $50,000, multiplied by the Adjustment
Factor, during the Look-Back Year and was a member of the top 20 percent of the
Employees (excluding Employees described in section 414(q)(8) of the Code) when
ranked on the basis of compensation for the Look-Back Year; or
(D) was an Includible Officer during the Look-Back
Year.
(2) Determination Year. An Employee is a Highly
Compensated Employee if the Employee performs services during the Determination
Year and the Employee --
(A) is a five percent owner at any time during the
Determination Year; or
(B) (i) is described in paragraph (1)(B) above,
paragraph (1)(C) above, or paragraph (1)(D) above when applied to the
Determination Year and (ii) is one of the 100 Employees who receives the most
"compensation" (as defined in section 414(q)(7) of the Code) from the Affiliates
during the Determination Year.
(3) Calendar Year Calculation Election.
Notwithstanding the definition of "Look-Back Year," the Savings Plan Committee
may elect for any Plan Year that both the Determination Year and the Look-Back
Year shall be the Plan Year (i.e., the calendar year) for which the
determination is being made, in accordance with Treas. Reg. ss. 1.414(q)-1T
Q&A-14(b). The election made by the Savings Plan Committee with respect to this
Plan for any Plan Year must apply with respect to all plans, entities, and
arrangements of the Affiliates.
(4) Code and Regulations. The determination of who is
a Highly Compensated Employee, including the determinations of the number and
identity of Employees in the top 20 percent, the top 100 Employees, the number
of Employees treated as Includible Officers and the compensation that is
considered, shall be made pursuant to section 414(q) of the Code and the
regulations issued thereunder.
(p) "Includible Officer" means an Employee who (i) is an
officer (within the meaning of section 416(i) of the Code) of any Affiliate at
any time during the Determination Year or Look-Back Year (as applicable) and
(ii) receives "compensation" (as defined in section 414(q)(7) of the Code) from
the Affiliates during the applicable year that is greater than 50 percent of the
dollar limitation in effect under section 415(b)(1)(A) of the Code for the
calendar year in which the Determination Year or Look-Back Year begins. No more
than 50 Employees (or, if less, the greater of three Employees or 10 percent of
the Employees) shall be treated as Includible Officers. For purposes of the
preceding sentence, Employees described in section 414(q)(8) of the Code shall
not be taken into account. When no officer has compensation greater than the
amount set forth above, the highest paid officer shall be treated as an
Includible Officer.
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(q) "Look-Back Year" means the 12-month period immediately
preceding the Determination Year.
(r) "Nonhighly Compensated Employee" shall mean an Employee
who is neither a Highly Compensated Employee nor a Family Member.
4.2 Limitation on Before-Tax Contributions
(a) Maximum Amount of Before-Tax Contributions. The amount of
a Participant's Before-Tax Contributions during any calendar year, when added to
the "elective deferrals" (within the meaning of Treas. Reg. ss. 1.402(g)-1(b))
on behalf of the Participant under all other plans, contracts or arrangements of
the Company or any Affiliate, shall not exceed $7,000 (as adjusted pursuant to
section 402(g)(5) of the Code).
(b) Actual Deferral Percentage Test. The Before-Tax
Contributions of the Eligible Participants shall meet at least one of the
following two tests --
(1) The Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Deferral Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25.
(2) The Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Deferral Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by two, provided
that the Actual Deferral Percentage for Eligible Participants who are Highly
Compensated Employees does not exceed the Actual Deferral Percentage for
Eligible Participants who are Nonhighly Compensated Employees by more than two
percentage points, or, in conjunction with the Actual Contribution Percentage
test under Section 4.3(a), by such lesser amount as prescribed under Treas. Reg.
ss. 1.401(m)-2 or any successor thereto to prevent the multiple use of this
alternative limit. If, however, a multiple use of this alternative limit occurs,
the multiple use shall be corrected by reducing either the Actual Deferral
Percentage or the Actual Contribution Percentage (at the Savings Plan
Committee's election) of Eligible Participants who are Highly Compensated
Employees in the manner described in Section 4.5 or 4.6, respectively.
(c) Special Rules
(1) For purposes of this Section, the Actual Deferral
Ratio for any Eligible Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible to have elective deferrals allocated to his
account under two or more plans or arrangements described in section 401(k) of
the Code that are maintained by the Company or an Affiliate shall be determined
as if all such elective deferrals were made under a single plan or arrangement.
However, plans or arrangements that are not permitted to be aggregated under
Treas. Reg. ss. 1.401(k)-1(b)(3)(ii)(B) are not aggregated for this purpose. If
a Highly Compensated Employee participates in two or more
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plans or arrangements that must be aggregated under this paragraph (1), but that
have different plan years, his Actual Deferral Ratio shall be calculated by
treating all plans or arrangements whose plan years end with or within the same
calendar year as a single plan or arrangement.
(2) In the event that this Plan satisfies the requirements
of sections 401(k), 401(a)(4), or 410(b) (other than section 410(b)(2)(A)(ii))
of the Code only if aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such sections only if aggregated with
this Plan, then this Section shall be applied by determining the Actual Deferral
Ratios of Eligible Participants as if all such plans were a single plan. Plans
may be aggregated in order to satisfy section 401(k) of the Code only if they
have the same plan year.
(3) If an Eligible Participant who is a Highly Compensated
Employee is subject to the family aggregation rules of section 414(q)(6) of the
Code, the combined Actual Deferral Ratio for the family group (which is treated
as one Highly Compensated Employee) shall be determined by combining the
Before-Tax Contributions and Salary of all Family Members who are Eligible
Participants, and the Family Members shall be disregarded in determining the
Actual Deferral Ratio for Eligible Participants who are Nonhighly Compensated
Employees. If an Employee is required to be aggregated as a member of more than
one family group, all Eligible Participants who are members of those family
groups that include such Employee shall be treated as one family group.
(4) A Before-Tax Contribution shall be taken into account
under subsection (b) above for a Plan Year only if it relates to Salary that
would have been received by the Eligible Participant in the Plan Year, but for
the Eligible Participant's election to defer a portion of his Salary under
Section 3.1.
(5) A Before-Tax Contribution shall be taken into account
under subsection (b) above for a Plan Year only if it is allocated to the
Eligible Participant's Account as of a date within that Plan Year. For this
purpose, a Before-Tax Contribution shall be considered allocated as of a date
within the Plan Year if the allocation is not contingent on participation in the
Plan or the performance of services after the date and the Before-Tax
Contribution is actually paid to the Trust Fund no later than 12 months after
the end of the Plan Year to which the Before-Tax Contribution relates.
(6) The determination and treatment of the Before-Tax
Contributions and Actual Deferral Ratio of any Eligible Participant shall
satisfy such other requirements as may be prescribed by the Secretary of the
Treasury.
4.3 Limitations on Company Matching Contributions
(a) Actual Contribution Percentage Test. The Company Matching
Contributions of the Eligible Participants shall meet at least one of the
following two tests --
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(1) The Actual Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Contribution Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25.
(2) The Actual Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Contribution Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by two, provided
that the Actual Contribution Percentage for Eligible Participants who are Highly
Compensated Employees does not exceed the Actual Contribution Percentage for
Eligible Participants who are Nonhighly Compensated Employees by more than two
percentage points, or, in conjunction with the Actual Deferral Percentage test
under Section 4.2(b), by such lesser amount as prescribed under Treas. Reg. ss.
1.401(m)-2 or any successor thereto to prevent the multiple use of this
alternative limit. If, however, a multiple use of this alternative limit occurs,
the multiple use shall be corrected by reducing either the Actual Deferral
Percentage or the Actual Contribution Percentage (at the Savings Plan
Committee's election) of Eligible Participants who are Highly Compensated
Employees in the manner described in Section 4.5 or 4.6, respectively.
(b) Special Rules
(1) For purposes of this Section, the Actual Contribution
Ratio for any Eligible Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible to make after-tax contributions, or to have
matching contributions allocated to his account, under two or more plans
described in section 401(a) of the Code that are maintained by the Company or an
Affiliate shall be determined as if all such after-tax and matching
contributions were made under a single plan. However, plans that are not
permitted to be aggregated under Treas. Reg. ss. 1.401(m)-1(f)(1)(ii)(B) are not
aggregated for this purpose. If a Highly Compensated Employee participates in
two or more plans that must be aggregated under this paragraph (1), but that
have different Plan Years, his Actual Contribution Ratio shall be calculated by
treating all such plans whose plan years end with or within the same calendar
year as a single plan.
(2) In the event that this Plan satisfies the requirements
of section 410(b) of the Code only if aggregated with one or more other plans,
or if one or more other plans satisfy the requirements of section 410(b) of the
Code only if aggregated with this Plan, then this Section shall be applied by
determining the Actual Contribution Ratios of Eligible Participants as if all
such plans were a single plan.
(3) If an Eligible Participant who is a Highly Compensated
Employee is subject to the family aggregation rules of section 414(q)(6) of the
Code, the combined Actual Contribution Ratio for the family group (which is
treated as one Highly Compensated Employee) shall be the Actual Contribution
Ratio determined by combining the Company Matching Contributions and Salary of
all Family Members who are Eligible Participants. If an Employee is required to
be aggregated as a member of more than one family
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group, all Eligible Participants who are members of those family groups that
include such Employee shall be treated as one family group.
(4) A Company Matching Contribution shall be taken into
account under subsection (a) above for a Plan Year only if it is (i) made on
account of the Eligible Participant's Before-Tax Contributions for the Plan
Year, (ii) allocated to the Eligible Participant's Account during the Plan Year,
and (iii) paid to the Trust Fund on or before the last day of the 12th month
following the end of the Plan Year.
(5) The determination and treatment of the Actual
Contribution Ratio of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
4.4 Distribution of Excess Deferrals
(a) In General. Notwithstanding any other provision of the
Plan, Excess Deferrals plus any income and minus any loss allocable thereto, to
the extent of the Participant's non-matched Before-Tax Contributions plus any
income and minus any loss allocable thereto, shall be distributed no later than
April 15, 1997, and each April 15 thereafter to Participants who claim allocable
Excess Deferrals for the preceding calendar year. To the extent (if any) that a
Participant's Excess Deferrals for a Plan Year exceed the amount of his
non-matched Before-Tax Contributions for such Plan Year, such Participant's
matched Before-Tax Contributions, to the extent of such excess, plus any income
and minus any loss allocable thereto, shall be distributed to such Participant
within the period described above. In the event any matched Before-Tax
Contributions are distributed under this subsection (a), Company Matching
Contributions made with respect to such Before-Tax Contributions shall be
forfeited and used to reduce Company Matching Contributions. Excess Deferrals
distributed under the Plan are not to be disregarded as Annual Additions merely
because they are Excess Deferrals or are distributed. Company Matching
Contributions forfeited under this subsection (a) shall not be taken into
account under Section 4.3(a).
(b) Claims. A Participant's claim shall be in writing; shall
be submitted to the Savings Plan Committee no later than the March 1 immediately
following the taxable year for which the Excess Deferrals were made; shall
specify the Participant's Excess Deferrals for the preceding calendar year
(which shall in no event exceed the Participant's Before-Tax Contributions for
that calendar year); and shall be accompanied by the Participant's written
statement that if the Excess Deferrals are not distributed, they, when added to
amounts deferred under other plans or arrangements described in sections 401(k),
408(k), and 403(b) of the Code for such calendar year, exceed the limit imposed
on the Participant by section 402(g) of the Code for the year in which the
Deferrals occurred. To the extent any Participant has Excess Deferrals taking
into account only the Excess Deferrals made to this Plan, he shall be deemed to
have submitted the claim described in this subsection (b).
(c) Determination of Income or Loss. A Participant's Excess
Deferrals shall be adjusted for income or loss to the earlier of the date of
distribution or December 31 of the taxable year for which the Excess Deferrals
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were deferred. The income or loss allocable to the Excess Deferrals is the
income or loss allocable to the Participant's Before-Tax Contributions Account
for the taxable year multiplied by a fraction; the numerator of the fraction is
the Participant's Excess Deferrals for the year and the denominator of the
fraction is the Participant's Account balance attributable to Before-Tax
Contributions as of the last day of the taxable year reduced by any gains and
increased by any losses allocable to his Before-Tax Contributions Account during
the taxable year.
(d) Accounting for Excess Deferrals. Excess Deferrals
distributed under this Section shall be distributed from the Participant's
Before-Tax Contributions Account.
4.5 Distribution of Excess Contributions
(a) In General. Notwithstanding any other provision of the
Plan, Excess Contributions plus any income and minus any loss allocable thereto,
to the extent of the Participant's non-matched Before-Tax Contributions plus any
income and minus any loss allocable thereto, shall be distributed within the
12-month period beginning on the earlier of (i) the last day of the Plan Year
for which such Excess Contributions were made or (ii) the date of the complete
termination of the Plan, to Participants on whose behalf the Excess
Contributions were made for such Plan Year. To the extent (if any) that a
Participant's Excess Contributions for a Plan Year exceed the amount of his
non-matched Before-Tax Contributions for such Plan Year, such Participant's
matched Before-Tax Contributions, to the extent of such excess, plus any income
and minus any loss allocable thereto, shall be distributed to such Participant
within the period described above. In the event any matched Before-Tax
Contributions are distributed under this subsection (a), Company Matching
Contributions made with respect to such Before-Tax Contributions shall be
forfeited and used to reduce Company Matching Contributions. Company Matching
Contributions forfeited under this subsection (a) shall not be taken into
account under Section 4.3(a). (If the Excess Contributions are not distributed
on or before the first March 15 after the last day of the Plan Year for which
the Excess Contributions were made, the Company will be subject to a 10 percent
excise tax under section 4979 of the Code with respect to the Excess
Contributions.) Excess Contributions shall be allocated to Participants who are
subject to the family member aggregation rules of section 414(q)(6) of the Code
in the manner prescribed by the regulations issued under that section.
(b) Determination of Excess Contributions. The amount of
Excess Contributions for a Highly Compensated Employee shall be determined in
the following manner. First, the Actual Deferral Ratio ("ADR") of the Highly
Compensated Employee(s) with the highest ADR shall be reduced to the extent
necessary to satisfy Section 4.2(b) or to cause such ADR to equal the ADR of the
Highly Compensated Employee(s) with the next highest ADR. Second, this process
shall be repeated until Section 4.2(b) is satisfied. The amount of Excess
Contributions for a Highly Compensated Employee equals the total of Before-Tax
Contributions taken into account under Section 4.2(b) minus the product of the
Highly Compensated Employee's reduced ADR as determined in this subsection (b)
and the Highly Compensated Employee's Salary.
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(c) Determination of Income or Loss. A Participant's Excess
Contributions shall be adjusted for income or loss to the last day of the Plan
Year for which the Excess Contributions were made. The income or loss allocable
to a Participant's Excess Contributions is the income or loss allocable to the
Participant's Deferral Amounts for the Plan Year multiplied by a fraction; the
numerator of the fraction is the Participant's Excess Contributions for the Plan
Year and the denominator of the fraction is the Participant's Account balance
attributable to Deferral Amounts as of the last day of the Plan Year, reduced by
any gains and increased by any losses allocable to his Account balance
attributable to Deferral Amounts during the Plan Year.
(d) Accounting for Excess Contributions. Excess Contributions
shall be distributed from the Participant's Before-Tax Contributions Account in
proportion to the Participant's Before-Tax Contributions.
(e) Reduction for Excess Deferrals Distributed. The Excess
Contributions which would otherwise be distributed under this Section shall be
reduced, pursuant to Treas. Reg. ss. 1.401(k)-1(f)(5), by the amount of Excess
Deferrals distributed to the Participant under Section 4.4 for the calendar year
ending with or within the Plan Year.
4.6 Forfeiture or Distribution of Excess Aggregate
Contributions
(a) In General. Excess Aggregate Contributions plus any income
and minus any loss allocable thereto shall be forfeited, if otherwise
forfeitable under the terms of this Plan, or if not forfeitable, distributed,
within the 12-month period beginning on the earlier of (i) the last day of the
Plan Year for which such Excess Aggregate Contributions were made or (ii) the
date of the complete termination of the Plan, to Participants on whose behalf
the Excess Aggregate Contributions were made for such Plan Year. (If the Excess
Aggregate Contributions are not distributed on or before the first March 15
after the last day of the Plan Year for which the Excess Aggregate Contributions
were made, the Company will be subject to a 10 percent excise tax under section
4979 of the Code with respect to the Excess Aggregate Contributions.) Excess
Aggregate Contributions shall be allocated to Participants who are subject to
the family member aggregation rules of section 414(q)(6) of the Code in the
manner prescribed by the regulations issued under that section.
(b) Determination of Excess Aggregate Contributions. The
amount of Excess Aggregate Contributions for a Highly Compensated Employee shall
be determined in the following manner. First, the Actual Contribution Ratio
("ACR") of the Highly Compensated Employee(s) with the highest ACR shall be
reduced to the extent necessary to satisfy Section 4.3 or to cause such ACR to
equal the ACR of the Highly Compensated Employee(s) with the next highest ACR.
Second, this process shall be repeated until Section 4.3 is satisfied. The
amount of Excess Aggregate Contributions for a Highly Compensated Employee shall
equal the total of his Contribution Amounts less the product of such Highly
Compensated Employee's reduced ACR as determined under this subsection (b)
multiplied by his Salary.
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(c) Determination of Income or Loss. A Participant's Excess
Aggregate Contributions shall be adjusted for income or loss to the last day of
the Plan Year for which the Excess Aggregate Contributions were made. The income
or loss allocable to a Participant's Excess Aggregate Contributions shall be the
income or loss allocable to the Participant's Contribution Amounts for the Plan
Year multiplied by a fraction; the numerator of the fraction is the
Participant's Excess Aggregate Contributions for the Plan Year and the
denominator of the fraction is the Participant's Account balance attributable to
Contribution Amounts as of the last day of the Plan Year, reduced by any gains
and increased by any losses allocable to his Account balance attributable to
Contribution Amounts.
(d) Accounting for Excess Aggregate Contributions. Excess
Aggregate Contributions forfeited or distributed under this Section shall be
treated as distributions of the Participant's Company Matching Contributions for
the Plan Year.
(e) Allocation of Forfeitures. Amounts forfeited by Highly
Compensated Employees under this Section --
(1) shall be treated as Annual Additions under Section
4.7;
(2) shall be applied to reduce Company Matching
Contributions; and
(3) shall not be allocated to the account of any Highly
Compensated Employee.
(f) Ordering Rules. The determination of Excess Aggregate
Contributions shall be made after first determining the Excess Deferrals, and
then determining the Excess Contributions.
4.7 Limitation on Annual Additions to Participants' Accounts
(a) Maximum Annual Addition
The maximum Annual Addition that may be contributed or
allocated to a Participant's Account under the Plan for any Limitation Year
shall not exceed the lesser of --
(1) the Defined Contribution Dollar Limitation, or
(2) 25 percent of the Participant's Limitation
Compensation.
(b) Limitation Re Pension Plan. If a Participant in this Plan
is, or was at any time, also a participant in any tax-qualified defined benefit
plan maintained by an Affiliate, the sum of the Defined Benefit Plan Fraction
and the Defined Contribution Plan Fraction, described in paragraphs (1) and (2)
below, with respect to such Participant for any Limitation Year shall not exceed
1.0. If the sum of the Defined Benefit Plan Fraction and the
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Defined Contribution Plan Fraction with respect to any Participant for any
Limitation Year would otherwise exceed 1.0, the Participant's annual benefit
under such defined benefit plan shall be reduced to the extent necessary to
comply with such 1.0 limit.
(1) The Defined Benefit Plan Fraction for any Limitation
Year is a fraction, the numerator of which is the projected annual benefit of
the Participant under any tax-qualified defined benefit plan maintained by an
Affiliate (determined as of the end of the Limitation Year), and the denominator
of which is the lesser of --
(A) the product of 1.25 multiplied by the dollar
limitation in effect under section 415(b)(1)(A) of the Code for such Limitation
Year; or
(B) the product of 1.4 multiplied by the amount which
may be taken into account under section 415(b)(1)(B) of the Code with respect to
such Participant for such Limitation Year.
For purposes of this paragraph (1), a Participant's projected annual benefit
shall be calculated under the tax-qualified defined benefit plan on the
assumptions that he remains in the service of the Company until his "Normal
Retirement Date" (as defined in such defined benefit plan) (or his current age,
if that is later), that his compensation continues at the same rate as in the
Limitation Year the projection is being made, and that all other factors used to
determine benefits under such defined benefit plan remain the same as in the
Limitation Year the projection is being made.
(2) The Defined Contribution Plan Fraction for any
Limitation Year is a fraction, the numerator of which is the sum of the Annual
Additions to the Participant's account under this Plan for such Limitation Year
and for all prior Limitation Years, and the denominator of which is the sum of
the lesser of the following amounts determined for such Limitation Year and for
each prior year of service with the Affiliates --
(A) the product of 1.25 multiplied by the dollar
limitation in effect under section 415(c)(1)(A) of the Code for such Limitation
Year; or
(B) 35 percent of the Participant's Limitation
Compensation for such Limitation Year.
(c) Aggregation Rules. For purposes of applying the
limitations of subsection (a) and subsection (b) above, applicable to a
Participant for a particular Limitation Year --
(1) All tax-qualified defined benefit plans ever
maintained by the Company shall be treated as one defined benefit plan; and all
tax-qualified defined contribution plans ever maintained by the Company shall be
treated as one defined contribution plan; and
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(2) Any tax-qualified defined benefit plan or tax-
qualified defined contribution plan maintained by any Affiliate shall be deemed
to be maintained by the Company.
4.8 Disposition of Excess Annual Additions
(a) Determination of Estimated Limitation Compensation. Prior
to the determination of the Participant's actual Limitation Compensation for a
Limitation Year, the maximum Annual Additions may be determined on the basis of
the Participant's estimated annual Limitation Compensation for such Limitation
Year. Such estimated annual Limitation Compensation shall be determined on a
reasonable basis and shall be uniformly determined for all Participants
similarly situated. Any Company contributions (including any Before-Tax
Contributions) based on estimated annual Limitation Compensation shall be
reduced by any excess Annual Additions carried over from prior years.
(b) Determination of Actual Limitation Compensation. As soon
as is administratively feasible after the end of the Limitation Year, the
maximum Annual Additions for such Limitation Year shall be determined on the
basis of the Participant's actual Limitation Compensation for such Limitation
Year.
(c) Disposition of Excess Annual Additions. If, pursuant to
subsection (a) or (b) above, there is an excess Annual Addition with respect to
a Participant for a Limitation Year as a result of the allocation of
forfeitures, a reasonable error in estimating a Participant's Salary or
Limitation Compensation, or a reasonable error in determining the amount of
Before-Tax Contributions that may be made to the Plan with respect to any
Participant under the limits of section 415 of the Code, or under other limited
facts and circumstances as determined by the Commissioner of Internal Revenue,
the excess Annual Addition shall be disposed of as follows --
(1) First, any Before-Tax Contributions for the Limitation
Year (plus any earnings attributable thereto), to the extent their return would
reduce the excess Annual Addition, shall be paid to the Participant as soon as
is administratively feasible. The distributed amounts shall be disregarded for
purposes of Section 4.2.
(2) Second, in the event the Participant is covered by the
Plan at the end of a Limitation Year, then such excess Annual Additions as
consist of Company contributions shall not be allocated or distributed to the
Participant, but shall be reapplied to reduce future Company contributions under
this Plan for the next Limitation Year (and for each succeeding Limitation Year
as necessary) for such Participant, so that in each such Limitation Year the sum
of actual Company contributions plus the reapplied amount shall equal the amount
of Company contributions which would otherwise be allocated to such
Participant's Account.
(3) Last, in the event the Participant is not covered by
the Plan at the end of a Limitation Year, then such excess Annual Additions as
consist of Company contributions shall not be allocated or distributed to the
Participant but shall be held unallocated in a suspense account for the
Limitation Year and shall be used in the next Limitation Year (and succeeding
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Limitation Years as necessary) to reduce future Company contributions for all
remaining Participants. If a suspense account is in existence at any time during
a Limitation Year pursuant to this paragraph (3), it will not participate in the
allocation of the Trust's gains and losses. Any amounts held in a suspense
account pursuant to this paragraph (3) which cannot be allocated to
Participants' Accounts, shall, upon the termination of the Plan, be returned to
the Company.
Article V
VALUATION AND INVESTMENT OF PARTICIPANTS' ACCOUNTS
5.1 Investment of Account Balance. Each Participant may
direct, at the time he commences participation, that his Account be invested in
one or any combination of Investment Funds made available by the Savings Plan
Committee pursuant to Section 5.2. A Participant may change his investment
election as of any business day in accordance with procedures established by the
Savings Plan Committee. Such change may be made applicable (as the Participant
shall elect) to those portions of his Account attributable to past and/or future
contributions to the Plan; provided, however, that past contributions invested
in the Pegasus Stock Fund may not thereafter be reapportioned to any other
Investment Fund.
Notwithstanding the foregoing, the Savings Plan Committee may,
in connection with any modification of the Investment Funds offered under the
Plan, provide, on a transitional basis or otherwise, different rules for the
administration of the Investment Fund elections of Participants.
5.2 Investment Funds.
(a) The Funds. The Trustees shall maintain, within the Trust,
the Investment Funds designated by the Savings Plan Committee from time to time,
as set forth in Appendix A hereto, for the investment of Plan assets. However,
the Savings Plan Committee may, in its discretion, discontinue any of the
Investment Funds listed in Appendix A and/or create additional Investment Funds.
(b) Provisions Concerning the Pegasus Stock Fund.
(1) Eligible Individual Account Plan. With respect to
investments in the Pegasus Stock Fund, it is intended that this Plan shall be an
eligible individual account plan within the meaning of section 407(d)(3) of
ERISA, and that up to 100 percent of the assets of the Plan may be invested in
Pegasus Stock in accordance with the provisions of the Plan.
(2) Acquisition of Pegasus Stock by the Trustees. The
Company may contribute shares of Pegasus Stock as Company Matching Contributions
and/or Rollover Matching Contributions to the Plan pursuant to Section 3.2(b)
and/or Section 3.9(b), respectively, or, pursuant to directions from the Savings
Plan Committee, the Trustees may purchase shares of Pegasus Stock using funds
held by the Trustees under the Plan or contributed to the
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Plan by the Company. Shares of Pegasus Stock may be purchased from the Company
and/or from a shareholder and/or on the open market (at such time as the shares
are readily tradeable on an established market). Shares of Pegasus Stock sold to
the Trustees by the Company or delivered by the Company as a Plan contribution
may be out of authorized and unissued shares. The Trustees may also hold, for
the purpose of allocation to the Accounts of Participants, shares of Pegasus
Stock that are forfeited under the terms of the Plan.
(3) Valuation of Pegasus Stock. Transactions between the
Trustees and the Company or the Trustees and any other purchaser or seller of
Pegasus Stock shall be based on the then current fair market value of such
Pegasus Stock. For purposes of determining such value, the fair market value of
shares of Pegasus Stock which are not readily tradeable on an established market
shall be determined as of the Valuation Date coincident with the last business
day of the Plan Year by a recognized independent firm of security analysts or
appraisers. Such fair market value shall also be determined by the Trustees as
needed throughout the Plan Year, in reliance on the most recent report of the
firm described in the preceding sentence, but as appropriately adjusted to
reflect the Company's current cash flow as reported in its Form 10-Q and any
other information deemed relevant by the Trustees.
(4) Distributions from Pegasus Stock Fund. If a
Participant becomes entitled to a distribution of amounts invested in the
Pegasus Stock Fund, such distribution shall be made in Pegasus Stock; provided,
however, that the value of any fractional shares held in the Pegasus Stock Fund
on the Participant's behalf shall be paid to the Participant in cash. Pegasus
Stock distributed from the Plan shall be subject to the Right of First Refusal
and the Call Option.
(5) Voting of Pegasus Stock. Should Pegasus Stock become
voting stock or be exchanged for voting stock, the Trustees shall be entitled to
vote all shares of Pegasus Stock held in any Participant's Account.
5.3 Reinvestment. Income and realized capital gains on the
portion of a Participant's Account invested in an Investment Fund shall be
reinvested in the same Fund.
5.4 Investment Fund Designations. All contributions other than
Company Matching Contributions and Rollover Matching Contributions shall be
invested in whichever Investment Fund(s) the Participant designates.
Contributions may be invested either --
(a) 100 percent in one Fund; or
(b) in two or more Funds on the basis of a distribution of
contributions between them in multiples of 10 percent.
To the extent a Participant does not specify how the contributions made on his
behalf are to be invested, they shall be invested in the Government Securities
Trust Money Market Series fund.
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5.5 Valuation of Investment Funds. The Trustee shall determine
and advise the Savings Plan Committee of the fair market value of each
Investment Fund as of the end of each calendar quarter.
5.6 Valuation of Participant's Account in Investment Funds.
The value of each Participant's Account shall be determined by the Trustee as of
each Valuation Date.
Article VI
ELIGIBILITY FOR BENEFITS
6.1 Normal Retirement Benefits. A Participant who retires from
the employ of the Company on his Normal Retirement Date shall receive payment of
his Account as promptly as practicable after the first Valuation Date following
his retirement, valued pursuant to Section 9.3.
6.2 Postponed Retirement Benefits. A Participant shall be
permitted to continue in employment beyond his Normal Retirement Date, in which
case he shall continue in all respects as a Participant until his Postponed
Retirement Date. Such Participant shall receive payment of his Account as
promptly as practicable after the first Valuation Date following his retirement,
valued pursuant to Section 9.3.
6.3 Termination Benefits
(a) Termination of Employment. A Participant whose employment
is terminated (voluntarily or involuntarily), and to whom Sections 6.1 and 6.2
are not applicable, shall receive payment of the vested portion of his Company
Account, and his Before-Tax and Rollover Accounts, valued pursuant to Section
9.3. Subject to the Participant's consent, if required by Section 9.6, benefits
shall be paid as promptly as practicable after the first Valuation Date
following his termination of employment.
(b) Later Vesting. A Participant who receives a distribution
under this Section or who makes a withdrawal from his Company Account under
Article X, and who has a balance remaining in his Company Account in which his
Vested Interest can increase, shall have his Vested Interest in his Company
Account determined as follows --
X = P (AB + D) - D,
where P is the vested percentage at the relevant time, AB is the balance in his
Company Account at the relevant time, and D is the amount of the prior
distribution or withdrawal.
(c) Sale of Assets or Subsidiary. The following events shall
constitute a separation from service for purposes of this Section --
(1) the sale or other disposition by the Company to an
unrelated entity of substantially all of the assets (within the meaning of
section 409(d)(2) of the Code) used by the Company in a trade or business of
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the Company with respect to a Participant who continues employment with the
entity acquiring the assets;
(2) the sale or other disposition by the Company to an
unrelated entity of the Company's interest in a subsidiary (within the meaning
of section 409(d)(3) of the Code) with respect to a Participant who continues
employment with the subsidiary.
However, an event shall not be treated as described in the
preceding sentence with respect to a Participant unless (i) the Participant
receives a "lump-sum distribution" (as defined in section 401(k)(10)(B)(ii) of
the Code) by reason of the event, (ii) the Company continues to maintain the
Plan (within the meaning of Treas. Reg. ss. 1.401(k)-1(d)(4)(i)) after the sale
or other disposition, and the purchaser does not so maintain the Plan after the
sale or other disposition, and (iii) the distribution is made in connection with
the disposition of assets or a subsidiary, within the meaning of Treas. Reg. ss.
1.401(k)-1(d)(4)(iii).
6.4 Reemployment
(a) Forfeiture Upon Distribution. If a Participant who is less
than 100 percent vested in his Company Account receives a single-sum
distribution of his entire Vested Interest under Section 6.3 upon termination of
his employment, the non-vested portion of his Company Account (the "restricted
benefit") shall be a Forfeiture and shall be treated as provided in Section 8.3.
A Participant who is not entitled to any benefit under the Plan shall be deemed,
upon his termination of employment, to have received a cash-out of $0.00 from
the Plan. If the Participant is thereafter reemployed by the Company and makes
the repayment described in subsection (c) below, an amount equal to the
Participant's restricted benefit shall be contributed to the Plan by the Company
and re-credited to the Participant's Company Account, as described in subsection
(c) below.
(b) Vesting Upon Reemployment. If a Participant is reemployed
before incurring five or more consecutive Breaks in Service, his Years of
Vesting Service before his Reemployment Date plus his Years of Vesting Service
after his Reemployment Date shall be counted to determine his Vested Interest in
the amount credited to his Company Account after his Reemployment Date. If the
Participant is reemployed after incurring five or more consecutive Breaks in
Service, Years of Vesting Service after such Breaks shall not be taken into
account in determining his Vested Interest in the amount in his Company Account
prior to such Breaks. If, as a result, the Participant has different vested
percentages in amounts attributable to his pre-Break and post-Break Company
Account, the Savings Plan Committee shall maintain within his Company Account
separate subaccounts for such pre-Break and post-Break amounts.
(c) Repayment By Participant. If a Participant receives a
single-sum distribution and incurs a Forfeiture as described in subsection (a)
above, and thereafter resumes employment covered under the Plan, the Participant
may repay to the Plan the full amount of the distribution before the earlier of
(i) five years after the Participant's Reemployment Date, or (ii) the date on
which the Participant incurs the last of five consecutive
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Breaks in Service following the date of distribution. If the Participant makes
such a repayment, an amount equal to the Participant's restricted benefit shall
be restored to the Participant's Company Account.
(d) Restoration of Restricted Benefit. Any restricted benefit
restored under subsection (c) above shall thereafter be subject to the vesting
provisions of Section 8.2. The sources for restoring a restricted benefit shall
be, in order of priority --
(1) Forfeitures occurring in the Plan Year of restoration;
and, if not sufficient,
(2) additional Company contributions.
Article VII
DEATH BENEFITS
7.1 Designation of Beneficiary and Form of Payment of Death
Benefit. If a Participant has a Surviving Spouse at his death, the Spouse shall
be the Participant's Beneficiary, unless the Spouse has consented in the manner
described in Section 7.2 to the payment of the Participant's Account to a
Beneficiary other than the Spouse. If the Participant has no surviving Spouse at
his death, the Beneficiary shall be the Beneficiary designated by the
Participant. Any designation by the Participant and/or consent by the
Participant's Spouse shall be made by a written form delivered to the Savings
Plan Committee. Except as otherwise provided with respect to a surviving Spouse,
a Participant may, at any time prior to his death, change his Beneficiary
designation by completing a new written form, but a Beneficiary designation
shall remain in effect until such new form is received by the Savings Plan
Committee.
7.2 Requirements for Spouse's Consent
(a) To be effective, a consent by a Spouse to a Participant's
designation of a non-Spouse Beneficiary must be made in a writing filed with the
Savings Plan Committee, shall be specific with respect to the particular
non-Spouse Beneficiary (including any class of Beneficiaries or contingent
Beneficiaries) consented to, must be irrevocable, and must be witnessed by a
notary public or by a Plan representative designated by the Savings Plan
Committee. The specific Beneficiary(ies) and benefit form designated may not be
changed without the consent of the Spouse unless the Spouse expressly permits
subsequent designations by the Participant without any further consent by the
Spouse. A consent that permits subsequent designations by the Participant
without any further consent by the Spouse must acknowledge that the Spouse has
the right to limit consent to a specific Beneficiary and to a specific benefit
form and that the Spouse voluntarily elects to relinquish such rights.
(b) Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of the Plan representative that such
written
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consent cannot be obtained because there is no Spouse or because the
Participant's Spouse cannot be located, the Participant's designation of a
non-Spouse Beneficiary shall be deemed a permissible election. If the Spouse is
legally incompetent to give consent, the Spouse's legal guardian may give
consent, even if such guardian is the Participant. Also, if the Participant is
legally separated or has been abandoned (within the meaning of local law) and
the Participant has a court order to such effect, spousal consent is not
required unless a qualified domestic relations order (as defined in section
414(p) of the Code) provides otherwise.
(c) Any consent required under this Section shall be valid
only with respect to the Spouse who signs the consent; or, in the event of a
deemed permissible election, the designated Spouse (if any). Additionally, a
Participant may revoke a prior Beneficiary designation without the consent of
his Spouse at any time before the commencement of benefits. The number of
revocations or consents shall not be limited. Any new designation or change of
Beneficiary shall require a new spousal consent.
7.3 Payment of Benefits. Upon the death of any Participant,
his Beneficiary shall receive payment of his Account as promptly as practicable
after the first Valuation Date following the Participant's death.
Article VIII
VESTING
8.1 Vested Interest in Before-Tax Contributions Account. A
Participant's Vested Interest in his Before-Tax Contributions Account shall be
100 percent at all times.
8.2 Vested Interest in Company Account
(a) A Participant's Vested Interest in his Company Account
shall be 100 percent when the Participant --
(1) attains Normal Retirement Age;
(2) incurs a Disability; or
(3) dies.
(b) Except as otherwise provided in subsection (a) above, a
Participant's Vested Interest in his Company Account shall be determined in
accordance with the following schedule --
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Vested
Years of Vesting Service Percentage
------------------------ ----------
Fewer than 2 0
2 but fewer than 3 34
3 but fewer than 4 67
4 or more 100
8.3 Forfeitures. All Forfeitures which arise hereunder shall
be applied as soon as possible to restore restricted benefits as provided in
Section 6.4(d) and, to the extent any Forfeitures remain, Forfeitures of Company
Matching Contributions shall be used to reduce subsequent Company Matching
Contributions, Forfeitures of Company Additional Contributions shall be used to
reduce subsequent Company Additional Contributions, and Forfeitures of Rollover
Matching Contributions shall be used to reduce subsequent Company Matching
Contributions, Company Additional Contributions, and/or Rollover Matching
Contributions.
8.4 No Divestment for Cause. There shall be no divestment of a
Participant's Vested Interest for any cause.
Article IX
PAYMENT OF BENEFITS
9.1 Method of Payment. Any distribution under the Plan shall
be paid (in either cash or Pegasus Stock, as provided in Section 9.2) in a
single sum from the Trust Fund. If the value of the Participant's Vested
Interest does not exceed (and did not at the time of any prior distribution
exceed) $3,500, the Participant's Vested Interest shall be paid to him in the
form of an involuntary single-sum payment from the Trust Fund. If the value of
the Participant's Vested Interest exceeds (or at the time of any prior
distribution exceeded) $3,500, the Participant must consent in writing, pursuant
to Section 9.6, to any distribution from his Account before his Normal
Retirement Age.
9.2 Form of Payment. Except as provided in Section 5.2(b)(4),
regarding distributions from the Pegasus Stock Fund, payment of benefits under
the Plan shall be made in cash or its equivalent.
9.3 Valuation of Accounts. The distribution value of each
Investment Fund in which the Participant has elected to invest his Account shall
equal such Fund's share price as of the actual liquidation date multiplied by
the Participant's portion of such Fund's share balance. The share balance of the
portion of the Participant's Account invested in any Investment Fund shall equal
the number of shares of such Fund credited to the Participant's Account as of
the Valuation Date immediately preceding the benefit commencement date.
9.4 Entitlement to Benefits. A Participant shall not be
entitled to any benefits until his right has been determined by the Savings Plan
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Committee pursuant to the terms of the Plan and until he has given to the
Savings Plan Committee, in proper form, the necessary data it asks for (such as
proof of the birth date of the Participant and his Beneficiary).
9.5 Requirements Concerning Distributions. All benefit
distributions under this Article shall be subject to the following requirements
- --
(a) Before Death
(1) Last Date for Commencement of Benefit Payments. The
payment of benefits to a Participant under this Plan shall commence not later
than the 60th day after the close of the Plan Year in which the latest of the
following events occurs --
(A) the Participant attains his Normal Retirement Age;
(B) the tenth anniversary of the year the Participant
commenced participation in the Plan; or
(C) the termination of the Participant's service with
all Affiliates.
Notwithstanding the above, if the amount of payment required
otherwise to commence on a date determined under this Section or under any other
Section of the Plan cannot be ascertained by such date, or if the Savings Plan
Committee is unable to locate the Participant or Beneficiary after making
reasonable efforts to do so, a payment retroactive to such date may be made no
later than 60 days after the later of (i) the earliest date on which the amount
of such payment can be ascertained under the Plan or (ii) the earliest date on
which the Participant or Beneficiary is located.
(2) Additional Rule for Commencement of Benefit Payments.
The distribution of benefits to each Participant who is entitled to a benefit
under the Plan shall be made not later than the Participant's "Required
Beginning Date" (as defined in subsection (c) below).
(b) After Death
(1) Five-Year Rule. If a Participant dies before his
Required Beginning Date, and if any portion of the Participant's interest is
payable to (or for the benefit of) his designated Beneficiary, distribution
shall be made not later than the latest of --
(A) December 31 of the year after the year of the
Participant's death;
(B) such later date as regulations of the Secretary of
the Treasury may prescribe; or
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(C) if the Participant's designated Beneficiary is his
surviving Spouse, December 31 of the year in which the Participant would have
attained age 70-1/2.
In any other case, the entire benefit of the Participant
shall be distributed by December 31 of the year containing the fifth anniversary
of the date of his death.
(2) Special Rule for Surviving Spouse. For purposes of
paragraph (1) above, if the Participant's designated Beneficiary is his
surviving Spouse and if such surviving Spouse dies before distribution is made,
then this subsection (b) shall be applied as if such surviving Spouse were the
Participant.
(c) "Required Beginning Date" shall mean --
(i) Except as provided in paragraph (ii) below, the
Required Beginning Date of a Participant is April 1 of the calendar year
following the calendar year in which the Participant attains age 70-1/2.
(ii) The Required Beginning Date of a Participant who
attains age 70-1/2 before January 1, 1988, is April 1 of the calendar year
following the calendar year in which the later of retirement or attainment of
age 70-1/2 occurs. The Required Beginning Date of a Participant who attains age
70-1/2 during 1988 and who has not retired as of January 1, 1989, is April 1,
1990.
(d) Regulations Control. Distributions under this Section
shall be made pursuant to section 401(a)(9) of the Code and regulations issued
thereunder. This Section and section 401(a)(9) of the Code shall take precedence
over any distribution options in the Plan inconsistent with this Section or
section 401(a)(9) of the Code.
9.6 Participant's Consent to Distribution of Benefits
(a) Except as provided in subsections (b) and (c) below,
the Savings Plan Committee shall provide each Participant, not more than 90 days
and not fewer than 30 days prior to the date his Vested Interest is distributed
to him, written notice of his right to defer receipt of the distribution until
his Normal Retirement Age. Distribution shall not be made prior to the
Participant's Normal Retirement Age unless the Participant affirmatively elects
a distribution in writing on a form filed with the Savings Plan Committee.
(b) The written notice described in subsection (a) above
shall not apply to the distribution if (i) the Participant receives an
involuntary single-sum payment under Section 9.1, or (ii) the distribution is
made on or after the Participant's Normal Retirement Age.
(c) A distribution may be made or may commence fewer than
30 days after the notice described in subsection (a) above is given to the
Participant, provided --
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(i) the Savings Plan Committee clearly informs the
Participant that he has a right to a period of at least 30 days after receiving
the notice to consider whether or not to elect the distribution (or, if
applicable, a particular distribution option); and
(ii) the Participant, after receiving the notice,
affirmatively elects the distribution.
9.7 Direct Rollovers of Eligible Rollover Distributions Made
From This Plan
(a) Direct Rollovers. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a distributee's election under
this Section, a distributee may elect, at the time and in the manner prescribed
by the Savings Plan Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(b) Definitions.
(1) "Eligible rollover distribution" -- Any
distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a specified
period of 10 years or more; any distribution to the extent such distribution is
required under section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities).
(2) "Eligible retirement plan" -- An individual
retirement account described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to the
Surviving Spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(3) "Distributee" -- An Employee or former Employee.
In addition, the Employee's or former Employee's Surviving Spouse and the
Employee's or former Employee's Spouse or former spouse who is the alternate
payee under a qualified domestic relations order are distributees with regard to
the interest of the Spouse or former spouse.
(4) "Direct rollover" -- A payment by the Plan to the
eligible retirement plan specified by the distributee.
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Article X
WITHDRAWALS
10.1 General Rules for All Withdrawals
(a) Amount and Valuation. Subject to this Article, a
Participant may withdraw, as of any Valuation Date, an amount from that portion
of his Account not invested in the Pegasus Stock Fund upon written application
to the Savings Plan Committee made at least 15 days before the date on which the
Participant wishes the withdrawal to occur. The minimum withdrawal is the lesser
of $1,000 or 100 percent of the value of the Participant's Vested Interest. The
value of the Participant's Vested Interest and the value of the withdrawal shall
be determined under Section 9.3.
(b) From Accounts. Withdrawals from a Participant's Account
(other than from that portion invested in the Pegasus Stock Fund) shall be
made in the following order --
(1) first, from the Participant's Rollover Account;
(2) second, from the Participant's Before-Tax
Contributions Account; and
(3) last, from the Participant's vested Company Account.
No amounts may be withdrawn form the Pegasus Stock Fund under this Article.
(c) From Investment Funds. To the extent that any withdrawal
is made from a particular Account of a Participant, such withdrawal shall be
made pro-rata from the investments of such Account in the Investment Funds other
than the Pegasus Stock Fund.
10.2 Withdrawals On or After Attainment of Age 59-1/2. A
Participant who has attained age 59-1/2 may withdraw amounts from any of his
Accounts for any reason.
10.3 Hardship Withdrawals of Before-Tax Contributions. A
Participant who has not attained age 59-1/2 may withdraw without suspension an
amount from his Before-Tax Contributions Account, as a hardship withdrawal,
subject to the following rules --
(a) A hardship withdrawal is permitted only if the hardship
consists of (i) an immediate and heavy financial need of the Participant and
(ii) the withdrawal requested is necessary to satisfy the financial need
(including any amounts necessary to pay any federal, state, or local income
taxes or penalties reasonably anticipated to result from the withdrawal).
Hardship withdrawals may not include earnings on the Participant's Before-Tax
Contributions.
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(b) An immediate and heavy financial need consists only of the
following (plus the associated taxes and penalties described in subsection (a)
above) --
(1) expenses for medical care described in section 213(d)
of the Code previously incurred by the Participant, the Participant's Spouse, or
any "dependents" of the Participant (as defined in section 152 of the Code), or
necessary for those persons to obtain medical care described in section 213(d)
of the Code;
(2) costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments);
(3) the payment of tuition, related educational fees, and
room and board expenses for the next 12 months of post-secondary education for
the Participant, the Participant's Spouse, children, or "dependents" (as defined
in section 152 of the Code);
(4) payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure on the mortgage on the
Participant's principal residence; or
(5) any other event deemed an immediate and heavy
financial need by the Commissioner of Internal Revenue in revenue rulings,
notices and other documents of general applicability.
(c) A distribution is necessary to satisfy the financial need
if the Savings Plan Committee reasonably relies upon the Participant's
representation that the distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant and the financial need
cannot be relieved --
(1) through reimbursement or compensation by insurance or
otherwise;
(2) by reasonable liquidation of the Participant's assets,
including assets of the Participant's Spouse and minor children that are
reasonably available to the Participant, to the extent such liquidation would
not itself cause an immediate and heavy financial need;
(3) by cessation of Before-Tax Contributions under the
Plan; or
(4) by other distributions or nontaxable (at the time of
the loan) loans from the Plan or from other plans maintained by the Company or
by any other employer, or by borrowing from commercial sources on reasonable
commercial terms.
(d) The withdrawal shall be based on the balance in the
Participant's Before-Tax Contributions Account determined under Section 10.4.
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(e) A Participant's request for a hardship withdrawal must be
approved by the Savings Plan Committee as meeting the hardship distribution
rules under section 401(k) of the Code and regulations issued thereunder at the
time of withdrawal.
(f) A Participant may continue to make Before-Tax
Contributions and continue to receive allocations of Company Matching
Contributions after a hardship withdrawal.
Article XI
LOANS
11.1 In General. A Participant employed by the Company and
receiving a Salary as of the loan date (and a terminated Participant, or a
Beneficiary, who is a party in interest to the Plan under section 3(14) of
ERISA) may apply in writing to the Savings Plan Committee for a loan from his
Account. For purposes of this Section, the term "Participant" shall include any
terminated Participant or Beneficiary to whom Plan loans are available, except
where the context otherwise requires.
11.2 Amount. The minimum amount of any loan for which a
Participant may apply under this Article shall be $1,000. The maximum amount of
any loan (when added to the outstanding balance of all other loans to the
Participant under the Plan) shall equal the lesser of --
(a) $50,000 (reduced by the excess, if any, of (i) the highest
outstanding balance of loans to the borrower from the Plan during the one-year
period ending on the day before the date the loan is made, over (ii) the
outstanding balance of loans to the borrower from the Plan on the date the loan
is made); or
(b) the lesser of 1/2 of the amount of the borrower's Vested
Interest, or the amount of the borrower's Vested Interest invested in Investment
Funds other than the Pegasus Stock Fund.
An assignment or pledge of any portion of the borrower's interest in the Plan
shall be treated as a loan under this Section.
11.3 Valuation. For purposes of this Article, in determining
the amount of a Participant's Vested Interest, his Account shall be valued
pursuant to Section 9.3 as of the last day of the month preceding the month in
which the loan is made.
11.4 Repayment. All loans shall be repayable by their terms
within five years, except for a loan used to acquire a dwelling unit which
within a reasonable time is to be used as the principal residence of the
Participant requesting the loan, which shall be repayable in 15 years. The
determination of whether a dwelling unit is to be used within a reasonable time
as the principal residence shall be made at the time the loan is made. Loans
shall be repaid with substantially level payments made not less
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frequently than quarterly over the term of the loan. Loans to active
Participants shall be repaid by payroll deduction from the wages of the
Participant, and loans to terminated Participants (and Beneficiaries) shall be
repaid by direct installment payments from the borrower to the Trustee,
according to an amortization schedule established by the Savings Plan Committee
in a nondiscriminatory manner, commencing with the month following the month in
which the loan is made. The Participant shall have the right to prepay all or
any portion of the outstanding principal balance of the loan without penalty at
the end of any calendar quarter, provided that the amount of any such prepayment
shall not be less than the lesser of the outstanding principal balance of the
loan or $1,000.
11.5 Security. Any loan to a Participant under the Plan shall
be secured by the pledge of all of the Participant's right, title, and interest
in his Accrued Benefit; provided that immediately after the granting or renewing
of the loan, not more than 50 percent of the Vested Interest of the Participant
shall be used as security for the outstanding balance of the loan. The pledge
shall be evidenced by the execution of a promissory note by the Participant
providing that, in the event of any default by the Participant on a loan
repayment, the Savings Plan Committee shall be authorized (to the extent
permitted by law) to deduct the amount of the loan outstanding and any unpaid
interest due thereon from the Participant's wages or salary to be thereafter
paid by the Company (in the case of an active Participant), to enforce the
Plan's security interest in the Participant's Accrued Benefit, and to take any
and all other actions necessary and appropriate to enforce the collection of the
unpaid loan.
11.6 Distribution of Benefits. A Participant shall not be
entitled to any distribution of benefits under Article IX or withdrawal under
Article X from the amounts credited to his Account that have been used to secure
a loan to him under this Article unless and until the loan has been completely
repaid.
11.7 Default
(a) Failure to Make Payment. A default shall occur if the
Participant fails to make any payment due under the terms of the loan in a
timely manner. In the event of a default by a Participant on a loan repayment,
all remaining payments of the loan shall be immediately due and payable. In the
case of any active Participant who is not entitled to a distribution under
Article IX or a withdrawal under Article X, the Savings Plan Committee shall, to
the extent permitted by law, deduct the total amount of the loan outstanding and
any unpaid interest due thereon from the wages or salaries payable to the
Participant by the Company in accordance with the Participant's promissory note.
In the case of any Participant who is entitled to a distribution under Article
IX or a withdrawal under Article X at the time of the default, the Trustee shall
deduct the total amount of the loan outstanding and any unpaid interest due
thereon from the Participant's Account in order to satisfy the amount due. In
the case of a borrower who is not entitled to a distribution or withdrawal at
the time of the default, the Trustee may delay enforcement of the Plan's
security interest in the borrower's Account. In addition, the Savings Plan
Committee shall take any
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and all other actions necessary and appropriate to enforce the collection of the
unpaid loan. For any Participant who defaults on a loan repayment, no further
contributions shall be made by or on behalf of the Participant to the Trust Fund
until the first payroll period commencing at least 12 complete calendar months
following the correction of the Participant's default.
(b) Separation from Service. If the Participant ceases to be
actively employed and receiving a Salary before the loan is repaid, as, for
example, in the event of a leave of absence or disability leave, the Savings
Plan Committee may permit the Participant to continue to make loan repayments or
may, in the Savings Plan Committee's discretion, accelerate the loan. If the
Participant separates from service, and if, following such separation, the
Participant is no longer a party in interest to the Plan, the loan shall be
accelerated, and the unpaid balance of the loan, and accrued interest thereon,
shall be deducted from the amount of any benefits which become payable to or on
behalf of the Participant under the Plan.
11.8 Interest. Each loan shall bear a rate of interest which
is two percentage points greater than the prime lending rate on the first
business day of the week in which the loan application is filed, as announced in
The Wall Street Journal, or such other rate of interest as is determined
necessary by the Savings Plan Committee to ensure that the rate of interest is
commensurate with the prevailing interest rate in effect for comparable loans at
one or more banks in the community. The interest rate and other terms of the
loan shall be fixed at the time the loan is made.
11.9 Administration
(a) All loans shall be effected by documents approved in form
by the Savings Plan Committee.
(b) All loans shall (i) be available to all eligible
Participants on a reasonably equivalent basis; (ii) not be made available to
eligible Participants who are Highly Compensated Employees (within the meaning
of Section 4.1(o)) in an amount greater than the amount made available to other
eligible Participants; and (iii) be made in accordance with this Article.
(c) A Participant shall not be permitted to take more than two
loans from the Plan in any one Plan Year.
11.10 Earmarking. Until a loan to a Participant is repaid, the
outstanding balance of the loan shall be treated as an investment by the
Participant for his Account only, and the interest paid by the Participant shall
be credited to his Account only. The Account shall not share in any other
earnings of the Plan with respect to the amount of the loan.
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Article XII
ALLOCATION OF FIDUCIARY RESPONSIBILITY
12.1 Allocation. Authority and responsibility for management
of the Plan and Trust Fund shall be allocated among the following persons --
(a) The Board of Directors shall have sole responsibility for
the appointment, removal and replacement of the members of the Savings Plan
Committee described in Article XIII and the Trustees described in Article XIV.
To the extent that they are carrying out these responsibilities, the members of
the Board of Directors shall be "named fiduciaries" of the Plan for purposes of
section 402(a)(1) of ERISA.
(b) The Savings Plan Committee shall have sole responsibility
for the administration of the Plan. The members of the Savings Plan Committee
shall be "named fiduciaries" of the Plan.
(c) Subject to the investment direction of the Participant
pursuant to Section 5.1, the Trustees shall have sole responsibility for the
management and control of the Trust Fund. The Trustees shall be "named
fiduciaries" of the Plan.
12.2 Exclusive Responsibility. It is the purpose of this Plan
and the Trust Agreement to allocate to each of the fiduciaries identified in
Section 12.1 exclusive responsibility for prudent execution of the functions
assigned to him and no responsibility for execution of functions assigned to
others. Whenever one such fiduciary is required by the Plan or the Trust
Agreement to follow the directions of another such fiduciary, the two
fiduciaries shall not be deemed to have been assigned a shared responsibility,
but the fiduciary giving the directions shall have sole responsibility for the
functions assigned to him, including issuing such directions, and the fiduciary
receiving the directions shall have sole responsibility for the functions
assigned to him, including following such directions insofar as they are on
their face proper under this Plan and the Trust Agreement and under applicable
law.
12.3 Co-Fiduciary Liability. A fiduciary shall not be liable
for a breach of fiduciary responsibility by another fiduciary to whom other
fiduciary responsibilities have been assigned under the Plan except under the
following circumstances --
(a) if he participates knowingly in, or knowingly undertakes
to conceal, an act or omission of such other fiduciary, knowing such act or
omission is a breach;
(b) if, by his failure properly to discharge his own fiduciary
responsibilities, he has enabled such other fiduciary to commit a breach; or
(c) if he has knowledge of a breach by such other fiduciary,
unless he makes reasonable efforts under the circumstances to remedy the breach.
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12.4 Interest of Participants. In carrying out the
responsibilities allocated to him under this Plan and the Trust Agreement, each
fiduciary shall act solely in the interest of the Participants and their
beneficiaries.
12.5 Employment of Advisers. A fiduciary identified in Section
12.1 may employ one or more persons to render advice with regard to such
fiduciary's responsibilities under the Plan.
12.6 Standards of Fiduciary Conduct. Each fiduciary described
in this Article shall act solely in the interest of the Participants and
beneficiaries and --
(a) for the exclusive purpose of providing benefits to
Participants and their beneficiaries and defraying reasonable expenses of
administering the Plan;
(b) with the care, skill, prudence and diligence that a
prudent man acting in a like capacity and familiar with such matters would use
under the circumstances;
(c) by diversifying the investments of the Trust Fund so as to
minimize the risk of large losses, unless under the circumstances it is clearly
prudent not to do so; and
(d) in accordance with the terms of the Plan and Trust
Agreement and the provisions of ERISA.
12.7 Limitation on Fiduciary Liability. No fiduciary,
including (but not limited to) the Committee and the Trustee, shall be liable
for any loss or by reason of any breach resulting from the Participant's
exercise of investment control as provided in Section 5.1. It is intended that
this Plan shall constitute a plan described in section 404(c) of ERISA and 29
CFR ss. 2550.404c-1 with respect to all Investment Funds other than the Pegasus
Stock Fund.
Article XIII
ADMINISTRATION
13.1 Savings Plan Committee. The Board of Directors shall
appoint a Savings Plan Committee of at least three persons to administer the
Plan. Members of the Savings Plan Committee shall serve at the pleasure of the
Board of Directors. Vacancies on the Savings Plan Committee shall be filled by
the Board of Directors. Any Savings Plan Committee member may resign by
delivering his written resignation to the Board of Directors, and the
resignation shall become effective at delivery or at any later date specified
therein. The Board of Directors shall notify the Trustee of the appointment of
the Savings Plan Committee and of subsequent changes in its membership.
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13.2 Quorum. The Savings Plan Committee shall act by a
majority vote. A quorum to do business shall be at least half of those who are
then members.
13.3 Administrative Rules. Subject to the terms of this Plan,
the Savings Plan Committee may, in its discretion, set and change its rules for
transacting business and administering the Plan.
13.4 Authority and Administrative and Professional Assistance.
The Savings Plan Committee members shall elect a Chairman, who must be a Savings
Plan Committee member, and a Secretary, who need not be. The Savings Plan
Committee members may --
(a) appoint, from their members, such committees with such
powers as they shall determine;
(b) authorize agents and/or appoint representatives to execute
or deliver instruments on their behalf or to do any other acts necessary and
proper to the administration of the Plan; and
(c) employ counsel, agents, and purveyors of clerical,
medical, actuarial, and other expert services which the Savings Plan Committee
deems necessary or appropriate to its administration of the Plan.
In addition to the foregoing powers and duties, the Savings Plan Committee shall
have the duty to establish reasonable procedures for determining the qualified
status of domestic relations orders which relate to the Plan, as provided in
section 414(p) of the Code.
13.5 Decision of Savings Plan Committee. The Savings Plan
Committee shall have sole discretion to carry out its responsibilities under
this Article of determining eligibility for benefits under the Plan and of
construing the terms of the Plan (including disputed or doubtful terms). To the
maximum extent permissible under law, the Savings Plan Committee's
determinations on all such matters shall be final and binding on all persons
involved.
13.6 Accounting. The Savings Plan Committee shall provide for
keeping such accounts as it deems necessary and proper.
13.7 Claims Procedure. The procedure for presenting claims
under the Plan and appealing denials thereof shall be as follows, subject,
however, to such modifications consistent with ERISA as the Savings Plan
Committee may deem necessary or desirable in the circumstances --
(a) Filing of Claims. Any Participant, surviving Spouse, or
Beneficiary (the "claimant") may file a written claim for a Plan benefit with
the Savings Plan Committee or with a person named by the Savings Plan Committee
to receive claims under the Plan.
(b) Notice of Denial of Claim. In the event of a denial or
limitation of any benefit or payment due to or requested by any claimant, the
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claimant shall be given a written notification containing specific reasons for
the denial or limitation of his benefit. The written notification shall contain
specific reference to the pertinent Plan provisions on which the denial or
limitation of benefits is based. In addition, it shall contain a description of
any additional material or information necessary for the claimant to perfect a
claim and an explanation of why such material or information is necessary.
Further, the notification shall provide appropriate information as to the steps
to be taken if the claimant wishes to submit his claim for review.
This written notification shall be given to the claimant
within 90 days after receipt of his claim by the Savings Plan Committee unless
special circumstances require an extension of time for processing, in which case
written notice of the extension shall be furnished to the claimant prior to the
termination of the original 90-day period, and the notice shall indicate the
special circumstances which make the postponement appropriate. In no event may
the extension exceed a total of 180 days from the date of the original receipt
of the claim.
(c) Right of Review. In the event of a denial or limitation of
benefits, the claimant or his duly authorized representative shall be permitted
to review the pertinent documents and to submit to the Savings Plan Committee
issues and comments in writing. In addition, the claimant or his duly authorized
representative may make a written request for a full and fair review of his
claim and its denial or limitation by the Savings Plan Committee. Such written
request must be received by the Savings Plan Committee (or its delegate) within
60 days after receipt by the claimant of written notification of the denial or
limitation of the claim. The 60-day requirement may be waived by the Savings
Plan Committee in appropriate cases.
(d) Decision on Review
(1) A decision shall be rendered by the Savings Plan
Committee within 60 days after the receipt of the request for review. However,
where special circumstances make a longer period for decision necessary or
appropriate, the Savings Plan Committee's decision may be postponed on written
notice to the claimant (prior to the expiration of the initial 60-day period)
for an additional 60 days. In no event shall the Savings Plan Committee's
decision be rendered more than 120 days after the receipt of such request for
review.
(2) Any decision by the Savings Plan Committee shall be
furnished to the claimant in writing in a manner calculated to be understood by
the claimant and shall set forth the specific reason(s) for the decision and the
specific Plan provision(s) on which the decision is based.
(e) Deemed Denial. If a decision is not rendered within the
time period prescribed in subsection (b) or (d) above, such claim shall be
deemed denied.
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(f) Regulations. It is intended that the claims procedure of
this Plan be administered in accordance with the claims procedure regulations of
the Department of Labor set forth in 29 CFR ss. 2560.503.1.
13.8 Compensation. Savings Plan Committee members shall serve
without compensation, but the Company shall pay or reimburse them for reasonable
expenses incurred in performing their duties. The Savings Plan Committee shall
have the right to purchase such insurance as it deems necessary to protect the
Plan and the Trust Fund from loss due to any breach of fiduciary responsibility
by any person. Any premiums due on such insurance shall be paid from the Trust
Fund, provided that any such policy of insurance must permit recourse by the
insurer against the person who breaches his fiduciary responsibility. Nothing in
this Article shall prevent the Company, at its own expense, from providing
insurance to any person to cover potential liability of that person as a result
of a breach of fiduciary responsibility.
13.9 Plan Records. The Savings Plan Committee shall maintain
records containing all relevant data pertaining to Participants and their rights
under the Plan. Records pertaining solely to a particular Participant shall be
made available to him for examination during business hours upon request.
13.10 Funding Policy. The Savings Plan Committee shall, at
least annually, estimate the amount of the benefit payments which the Plan will
be required to make, taking into account anticipated Participant retirements and
terminations and all other relevant factors, and, on the basis of such estimate,
determine the Plan's need for liquidity. The Savings Plan Committee shall report
such determination in writing to the Trustee for consideration in the
formulation of the investment policy for the Trust.
Article XIV
TRUST FUND
14.1 Trust Agreement. Contributions to the Plan shall be put
in trust with a trustee or trustees selected by the Board of Directors, under a
Trust Agreement which shall provide that the Trust Fund is to be held, managed,
and disposed of by the Trustees in accordance with the terms of such Agreement.
14.2 Exclusive Benefit Rule. The Trust Agreement shall provide
that no part of the corpus of the Trust Fund or income thereon shall, at any
time prior to the satisfaction of all liabilities with respect to Participants
and their Spouses and Beneficiaries under the trust established under the Plan,
be used for, or diverted to, purposes other than for the exclusive benefit of
Participants or their Spouses or Beneficiaries (except as provided in Section
3.10); and it may contain such other provisions relating to the custody,
management, and disposition of the funds and assets of the Plan by the Trustees
as shall be deemed advisable by the Board of Directors.
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Article XV
AMENDMENT, TERMINATION, MERGER AND SUCCESSOR EMPLOYER
15.1 Amendment
(a) Subject to subsections (b) through (d) below, this Plan
may be amended, by written resolution by the Board of Directors, at any time.
(b) No amendment shall reduce the accrued benefit of any
Participant. For purposes of this subsection (b), an amendment which has the
effect of (i) eliminating or reducing an early retirement benefit or a
retirement-type subsidy, or (ii) eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment, shall be
treated as reducing accrued benefits as provided in section 411(d)(6) of the
Code and the regulations thereunder.
(c) In the case of an Employee who is a Participant on (i) the
date the amendment is adopted, or (ii) the date the amendment is effective, if
later, no amendment shall cause the nonforfeitable percentage (determined as of
the date specified in (i) or (ii)) of such Participant's right to his Accrued
Benefit to be less than his percentage computed under the Plan without regard to
such amendment.
(d) No amendment shall cause the computation of a
Participant's nonforfeitable percentage to be directly or indirectly affected
unless a Participant with three or more Years of Vesting Service is permitted to
elect, within 60 days after the latest of (i) the date the amendment is adopted,
(ii) the date the amendment becomes effective, or (iii) the date written
notification of the amendment is issued to the Participant, to have his
nonforfeitable percentage computed under the Plan without regard to such
amendment; provided, however, that no election shall be given to any Participant
whose nonforfeitable percentage under the Plan, as amended, cannot at any time
be less than such percentage determined without regard to such amendment.
15.2 Discontinuance and Termination. The Board of Directors
intends to continue the Plan indefinitely, but reserves the right at any time to
discontinue contributions to the Trust Fund under the Plan and to terminate or
partially terminate the Plan and Trust Fund. The discontinuance or termination
of the Plan by the Board of Directors shall not entitle the Company to the
return of any part of the Trust Fund or any part thereof set aside for
Participants pursuant to the Plan. If the Plan is terminated or partially
terminated or if contributions are permanently discontinued, the total amounts
then standing to the accounts of affected Participants in the employ of the
Company shall immediately vest.
Upon final termination of the Trust Fund, at such time as
shall be determined by the Board of Directors, the Savings Plan Committee shall
direct the Trustees to liquidate the assets held in the Accounts and, after
payment of all expenses and proportional adjustment of each Account to reflect
income or losses to the date of termination, to distribute the balance of each
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Participant's Account to each Participant, retired Participant, or, if
appropriate, to the Participant's Beneficiary. The Trustees, at the direction of
the Savings Plan Committee, shall make payment of such amounts pursuant to
Sections 9.1 and 9.3, no later than the time prescribed for the commencement of
such payments provided in Section 9.5.
In the case of any distributee described herein at the time of
distribution upon termination of the Plan or Trust Fund whose whereabouts are
unknown, the Savings Plan Committee shall notify such individual at the last
known address by certified mail with return receipt requested advising such
individual of the right to such a benefit. If the distributee cannot be located
in this manner, the Trustee shall establish a savings account for the
individual's benefit in which the individual's Account balance shall be
deposited. Upon the distribution of all Plan assets, the Trustee shall be
discharged from all obligations under the Plan and Trust and no Participant or
Beneficiary shall have any further rights or claims thereunder.
Notwithstanding the foregoing, amounts credited to a
Participant's Before-Tax Contributions Account shall not be distributed prior to
the Participant's attainment of age 59-1/2, separation from service (within the
meaning of Article VI), Disability, death, or financial hardship (within the
meaning of Section 10.3), except as a "lump-sum distribution" (as defined in
section 401(k)(10)(B)(ii) of the Code) to the Participant or his Beneficiary as
soon as administratively feasible after the termination of the Plan, provided
the Company does not establish or maintain a successor plan (within the meaning
of section 401(k)(10)(A)(i) of the Code and Treas. Reg.
ss. 1.401(k)-1(d)(3)).
15.3 Merger, Consolidation, or Transfer. This Plan shall not
be merged or consolidated with, nor shall any assets or liabilities be
transferred to, any other plan, unless the benefits payable to each Participant,
if the Plan were terminated immediately after such action, would be equal to or
greater than the benefits to which such Participant would have been entitled if
this Plan had been terminated immediately before such action.
15.4 Successor Employer. In the event of the dissolution,
merger, consolidation or reorganization of a Participating Employer, provision
may be made by which the Plan and Trust Fund will be continued by its successor;
and, in that event, the successor shall be substituted for the Participating
Employer under the Plan. The substitution of the successor shall constitute an
assumption of Plan liabilities by the successor, and the successor shall have
all of the powers, duties, and responsibilities of the Participating Employer
under the Plan.
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Article XVI
TOP-HEAVY PROVISIONS
16.1 Top-Heavy Definitions
(a) "Determination date" shall mean, with respect to any Plan
Year, the last day of the preceding Plan Year.
(b) "Determination period" shall mean, with respect to any
Plan Year, the Plan Year containing the determination date and the four
preceding Plan Years.
(c) "Key Employee" shall mean any Employee or former Employee
(and the Beneficiaries of such Employee) who at any time during a Plan Year
included in the determination period was --
(1) an officer of the Company and the other Affiliates
having an annual top-heavy compensation greater than 50 percent of the dollar
limitation applicable to defined benefit plans under section 415(b)(1)(A) of the
Code for such Plan Year;
(2) one of the 10 Employees having an annual top-heavy
compensation from the Company and the other Affiliates greater than the
limitation in effect under section 415(c)(1)(A) of the Code and owning (or
considered as owning within the meaning of section 318 of the Code) both more
than a 1/2 percent interest and the largest interests in the Company or any
other Affiliate;
(3) a five percent owner of the Company or any other
Affiliate (within the meaning of section 416(i)(1)(B)(i) of the Code); or
(4) a one percent owner of the Company or any other
Affiliate (within the meaning of section 416(i)(1)(B)(ii) of the Code) having an
annual top-heavy compensation from the Company and the other Affiliates of more
than $150,000.
For purposes of paragraph (1), no more than 50 employees (or if fewer, the
greater of three or 10 percent of the employees) shall be treated as officers.
The determination of who is a key Employee shall be made pursuant to section
416(i) of the Code and regulations thereunder.
(d) "Non-key Employee" shall mean any Employee who is not a
key Employee.
(e) "Permissive aggregation group" shall mean, with respect to
any Plan Year, the required aggregation group plus any other defined benefit
plan or defined contribution plan which the Company elects to include, provided
such permissive aggregation group meets the requirements of sections 401(a)(4)
and 410 of the Code with such defined benefit plan or defined contribution plan
being taken into account.
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(f) "Required aggregation group" shall mean, with respect to
any Plan Year --
(1) each defined benefit plan and each defined
contribution plan of the Company in which a key Employee is a participant or was
a participant at any time during the determination period (regardless of whether
the plan has been terminated); and
(2) each other defined benefit plan and each other defined
contribution plan of the Company which, during the determination period, enables
any defined benefit plan or defined contribution plan described in paragraph (1)
above to meet the requirements of section 401(a)(4) or 410 of the Code.
(g) "Top-heavy compensation" shall mean compensation as
defined in section 414(q)(7) of the Code.
(h) "Top-heavy Plan" shall mean, for any Plan Year beginning
on or after January 1, 1984, this Plan if --
(1) this Plan is not part of a required or permissive
aggregation group, and the top-heavy ratio for the Plan exceeds 60 percent;
(2) this Plan is part of a required aggregation group and
not part of a permissive aggregation group, and the top-heavy ratio for the
required aggregation group exceeds 60 percent; or
(3) this Plan is part of a required aggregation group and
part of a permissive aggregation group, and the top-heavy ratio for the
permissive aggregation group exceeds 60 percent.
(i) "Top-heavy ratio" shall mean a fraction. The numerator of
the fraction is the sum of the account balances of all key Employees under the
Plan, or, if the Plan is a member of a required or permissive aggregation group,
the present values of accrued benefits under all defined benefit plans in the
required or permissive aggregation group (hereinafter, the "aggregation group"),
plus the sum of the account balances of all key Employees under all defined
contribution plans in the aggregation group, as of the determination date. The
denominator of the fraction is a similar sum determined for all Employees. For
purposes of determining the fraction, the numerator and denominator shall
include any part of any accrued benefit or account balance distributed in the
determination period. If any individual (i) is not a key Employee but was a key
Employee in a prior Plan Year, or (ii) has not been credited with at least one
Hour of Service with the Company at any time during the determination period,
any accrued benefit or account balance of, or distribution to, such individual
shall not be taken into account.
For purposes of this subsection (i), the sum of accrued
benefits and account balances shall be determined as of the most recent
top-heavy valuation date that falls within the 12-month period ending on the
determination date. For purposes of determining whether this Plan, or any other
Plan included in the aggregation group, is a top-heavy plan, the accrued
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benefit of a non-key Employee shall be determined under (i) the method, if any,
that uniformly applies for accrual purposes under all plans maintained by the
Affiliates, or (ii) if there is no such method, as if such benefit accrued not
more rapidly than the lowest accrual rate permitted under the fractional accrual
rate of section 411(b)(1)(C) of the Code.
For purposes of this subsection (i), the actuarial
equivalent present values of accrued benefits and the sum of account balances
shall be determined as of the most recent valuation date that falls within the
12-month period ending on the determination date. The calculation of the
top-heavy ratio shall be made pursuant to section 416 of the Code and the
regulations thereunder.
(j) "Top-heavy valuation date" shall mean, with respect to
this Plan, the last day of the Plan Year.
16.2 Top-Heavy Rules. Notwithstanding any other provision of
the Plan, the following rules shall apply for any Plan Year beginning on or
after January 1, 1984 in which the Plan is determined to be a top-heavy plan --
(a) Minimum Benefit. The minimum benefit requirement
applicable to top-heavy plans shall be provided under this Plan. Each
Participant of this Plan who is a non-key Employee, and is an Employee on the
last day of the Plan Year shall be entitled to a minimum allocation of Company
contributions under this Plan. Each such Participant shall be entitled to this
minimum allocation regardless of his level of Limitation Compensation,
regardless of whether he completes 1,000 Hours of Service for the Plan Year, and
regardless of whether he fails to make mandatory contributions to the Plan.
Company Matching Contributions, Company Additional Contributions, and Rollover
Matching Contributions on behalf of such non-key Employee may be counted toward
the minimum allocation. However, Company Matching Contributions which are
counted toward the minimum allocation shall not be taken into account for
purposes of Section 4.3, and must meet the requirements of section 401(a)(4) of
the Code. The amount of the minimum allocation shall not be less than the lesser
of (i) three percent of such Participant's Limitation Compensation or (ii) the
largest percentage of the Company contributions (including Before-Tax
Contributions and Company Matching Contributions) and forfeitures allocated on
behalf of any key Employee under the Plan for such Plan Year as a percentage of
the first $150,000 (as adjusted by the Commissioner of Internal Revenue for
increases in the cost of living pursuant to section 401(a)(17)(B) of the Code)
of the key Employee's Limitation Compensation).
(b) Minimum Vesting. For any Plan Year in which this Plan is a
top-heavy plan, the following minimum vesting schedule shall apply to the
Participant's Accrued Benefit derived from Company contributions --
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Vesting
Years of Service Percentage
---------------- ----------
fewer than 2 0
2 but fewer than 3 34
3 but fewer than 4 67
4 or more 100
This subsection (b) does not apply to the Accrued Benefit of any Employee who
does not have an Hour of Service after the Plan has initially become a top-heavy
plan; such Employee's account balance attributable to Company contributions and
forfeitures shall be determined without regard to this subsection (b).
(c) Impact on Maximum Benefits. For any Plan Year in which the
Plan is a top-heavy plan, Section 4.7 shall be read by substituting the number
"1.00" for the number "1.25" wherever such number appears in sections 415(e)(2)
and 415(e)(3) of the Code, except that such substitution shall not have the
effect of reducing any benefit accrued under a defined benefit plan prior to the
first day of the Plan Year in which this provision becomes effective.
Article XVII
RELATING TO THE PARTICIPATING EMPLOYERS
17.1 Participating Employers. Any Affiliate, with the consent
of the Board of Directors, may adopt the Plan and become a Participating
Employer hereunder --
(a) by filing with the Board of Directors, the Savings Plan
Committee, and the Trustees a certified copy of a resolution of that company's
board of directors (or other governing body) providing for its adoption of the
Plan and stating its election to become a party to the Trust Agreement; and
(b) by filing with the Savings Plan Committee and the Trustees
a certified copy of a resolution of the Board of Directors providing for its
consent to such adoption.
17.2 Action by Board of Directors. Any action required or
permitted to be taken under the Plan by the Company shall be by resolution of
the Board of Directors or by a duly authorized committee of the Board of
Directors or by a person or persons authorized by resolution of the Board of
Directors or of such committee. Each Participating Employer appoints the Board
of Directors as its agent to exercise on its behalf any action required or
permitted to be taken under the Plan by the Company.
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<PAGE>
Article XVIII
MISCELLANEOUS
18.1 Company Notification. The Board of Directors, or its
delegate, shall promptly advise the Trustees and the Savings Plan Committee, in
writing, of the death, retirement or separation from service of a Participant
and shall execute and deliver to the Savings Plan Committee such forms as may be
required to carry out the provisions of this Plan. At the proper time, the
Savings Plan Committee shall take appropriate action based on such notification
and forms.
18.2 No Right to Employment. Participation in the Plan shall
not be deemed to be consideration for, an inducement to, or a condition of the
employment of any Employee. Nothing contained in this Plan shall be deemed to
give any Participant the right to be retained in the employment of the Company,
nor shall any Participant, retired Participant, deceased Participant, disabled
Participant, or terminated Participant have any right to any payment, except as
such payment may be provided under the terms of the Plan, and then only to the
extent that assets are available under the Plan.
18.3 No Assignment or Alienation. To the extent permitted by
law (and except as provided in Article XI with respect to loans to
Participants), the benefit payable to a Participant, and the death benefit (if
any) payable to a Beneficiary, shall not be subject to alienation, assignment,
attachment, execution, garnishment, pledge, or encumbrance, or to any other
legal or equitable process. The preceding sentence shall also apply to a right
to any benefit payable pursuant to a domestic relations order unless such order
is determined to be a qualified domestic relations order ("QDRO") (as defined in
section 414(p) of the Code) or a domestic relations order entered before January
1, 1985 which the Savings Plan Committee elects to treat as a QDRO. Benefits
payable to an alternate payee under a QDRO, or under any domestic relations
order entered before January 1, 1985 treated as such, may be distributed in such
manner and at such time as the order provides, even if earlier than the date on
which the Participant himself would be entitled to receive such benefits under
the Plan, and even if earlier than the Participant's "earliest retirement date,"
as defined in section 414(p)(4)(B) of the Code.
18.4 Unclaimed Benefits. Except as provided in Section 15.2,
any benefits payable to, or on behalf of, a Participant or Beneficiary which are
not claimed for a period of five years after the later of the Participant's
Normal Retirement Date or the date he actually retires shall be forfeited and
used to reduce the Company's contributions for the year of forfeiture.
Notwithstanding the foregoing, if a claim is made by the Participant or his
Beneficiary for the forfeited benefit, the benefit shall be immediately
reinstated.
18.5 Military Leave. An Employee or Participant who separates
from service with the Company for service in the U.S. Armed Forces shall be
credited upon his return, in addition to the credit for Hours of Service to
which he is entitled under Section 1.22, such other credit as may be
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prescribed by federal laws relating to military service and veterans'
reemployment rights, provided that he returns within the time prescribed by law
for the reemployment of veterans.
18.6 Titles. Titles of Articles and Sections are for general
information only and this Plan shall not be construed by reference thereto.
18.7 Pronouns; Number. Words used in the masculine shall be
read and construed in the feminine where they would so apply. Whenever
appropriate, words used in the singular shall include the plural and words used
in the plural shall include the singular.
18.8 Facility of Payment. If the Savings Plan Committee deems
any person incapable of receiving benefits to which he is entitled, by reason of
minority, illness, infirmity or other incapacity, it shall direct the Trustee to
make payment directly for the benefit of such person to any person selected by
the Savings Plan Committee to disburse it. Such payments shall, to the extent
thereof, discharge all liability of the Company, the Savings Plan Committee, and
the Trustee.
18.9 Expenses. Unless paid by the Company, any expenses
incurred in administering the Plan, including but not limited to expenses
incurred by the Savings Plan Committee, shall be deducted from the Account(s) to
which such expenses relate, or proportionally from all Accounts if such expenses
do not relate to any specific Account(s).
18.10 Savings Provision. In the event that any provision of
this Plan or the application thereof to any person or circumstance shall be
determined by a court of competent jurisdiction to be invalid or unenforceable
to any extent, the remainder of this Plan, or the application of such provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each provision of this Plan
shall be valid and enforced to the fullest extent permitted by law.
18.11 Governing Law. The Plan shall be construed, regulated
and administered according to the laws of the State of Delaware, to the extent
not superseded by Federal law.
IN WITNESS WHEREOF, PEGASUS MEDIA & COMMUNICATIONS, INC. has
caused these presents to be duly executed this 15 day of February, 1996.
Attest: PEGASUS MEDIA & COMMUNICATIONS, INC.
/s/ William E. Miles III By: /s/ Robert N. Verdecchio
- ---------------------------------- ----------------------------------
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APPENDIX A
APPROVED INVESTMENT FUNDS AS OF JANUARY 1, 1996
The Pegasus Stock Fund
Government Securities Trust Money Market Series
Prudential Equity Fund, Inc.
Prudential Growth Opportunity Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Prudential Diversified Bond Fund, Inc.
Prudential Jennison Fund, Inc.
Prudential Global Fund, Inc.
A-1
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AMENDMENT NO. 1
TO THE
PEGASUS COMMUNICATIONS SAVINGS PLAN
(Effective January 1, 1996)
WHEREAS, Pegasus Media & Communications, Inc. (the "Company")
established the Pegasus Communications Savings Plan (the "Plan") effective
January 1, 1996;
WHEREAS, Section 15.1 of the Plan provides that, subject to
certain inapplicable limitations, the Board of Directors of the Company may
amend the Plan by written resolution at any time;
WHEREAS, the Company desires to amend the Plan (i) to permit
eligible employees of Portland Broadcasting, Inc. to commence participation in
the Plan effective May 15, 1996, (ii) to limit the number of loans available to
a Participant under the Plan to one at any time, (iii) to provide for the merger
of the Portland Broadcasting, Inc. 401K Retirement Plan with and into the Plan
effective as of June 1, 1996, and (iv) to make certain other technical changes;
NOW, THEREFORE, subject to approval by the District Director
of Internal Revenue, the Plan shall be amended effective June 1, 1996 (except
where other effective dates are specifically provided) as follows:
1. Section 1.1 of the Plan is hereby deleted and replaced by
the following:
1.1 "Account" shall mean, as of any applicable date,
the aggregate of a Participant's Before-Tax Contributions Account,
Company Account, Rollover Account, and Portland Account.
2. Subsection (e) of Section 1.22 ("Hour of Service") of the
Plan is hereby deleted effective January 1, 1996 and
replaced by the following:
(e) For purposes of determining Years of Vesting
Service and eligibility for Company Matching Contributions, Company
Additional Contributions and Rollover Matching Contributions, an
Employee shall receive credit for Hours of Service with an Affiliate
only to the extent that such Hours are completed during the period that
the employer for whom the services are performed is an Affiliate.
<PAGE>
3. New Sections 1.35A and 1.35B are hereby added to Article I
("DEFINITIONS") of the Plan to read as follows:
1.35A "Portland Account" shall mean that account
established under Section 19.4 to hold amounts transferred from the
Portland Plan, and earnings and losses thereon.
1.35B "Portland Plan" shall mean the Portland
Broadcasting, Inc. 401K Retirement Plan, merged into this Plan
pursuant to Section 19.3 effective June 1, 1996.
4. The following proviso is hereby added at the end of the
first paragraph of Section 5.1 ("Investment of Account
Balance") of the Plan:
* * *; and further provided, that amounts held in a Participant's
Portland Account may not be invested in the Pegasus Stock Fund.
5. Paragraph (2) of subsection (a), and subsection (b), of
Section 9.5 ("Requirements Concerning Distributions") of the Plan are hereby
deleted and replaced by the following:
(2) Additional Rule for Commencement of
Benefit Payments. The distribution of benefits to each Participant who
is entitled to a benefit under the Plan shall be made (or shall
commence) not later than the Participant's "Required Beginning Date"
(as defined in subsection (c) below).
(3) Duration of Benefit Payments from
Portland Account. The distribution of benefit payments to a
Participant from his Portland Account (if any) shall be made, under
regulations prescribed by the Secretary of the
Treasury --
(A) over the life of the Participant, or
over the lives of the Participant and his designated
Beneficiary; or
(B) over a period not extending beyond the
life expectancy of the Participant or the joint life and last
survivor expectancy of the Participant and his designated
Beneficiary.
(b) After Death
(1) Distributions Already Begun. If a
Participant with a Portland Account dies after distribution of his
interest has commenced under subsection (a) above, the remaining
portion of his interest shall be distributed
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at least as rapidly as his interest would have been distributed under
the method as of the date of his death.
(2) Five-Year Rule for Other Cases. If a
Participant dies before distribution of his interest has commenced, and
if any portion of his interest is payable to (or for the benefit of)
his designated Beneficiary, (i) distribution of his Portland Account
(if any) may be made, under regulations prescribed by the Secretary of
the Treasury, over the life of the designated Beneficiary or over a
period not extending beyond the life expectancy of the designated
Beneficiary, and (ii) distribution of his Account (including his
Portland Account (if any)) may be made in a single sum, provided the
distribution commences or is made not later than the latest of --
(A) December 31 of the calendar year after
the calendar year of the Participant's death;
(B) any later date prescribed by regulations
of the Secretary of the Treasury; or
(C) if the Participant's designated
Beneficiary is his Surviving Spouse, December 31 of the
calendar year in which the Participant would have attained age
70-1/2.
In any other case, the entire benefit of the Participant shall be
distributed no later than December 31 of the calendar year including
the fifth anniversary of his death.
(3) Special Rule for Surviving Spouse. For
purposes of paragraph (2) above, if the Participant's designated
Beneficiary is his Surviving Spouse and his Surviving Spouse dies
before distributions begin, then this subsection (b) shall be applied
as if the Surviving Spouse were the Participant.
6. Subsection (a) of Section 10.1 ("General Rules for All
Withdrawals") of the Plan is hereby deleted effective January 1, 1996 and
replaced by the following:
(a) Amount and Valuation. Subject to Section 10.3,
which prohibits a Participant who has not attained age 59-1/2 from
withdrawing any amount from his Account except from his Before-Tax
Contributions Account and then only for reasons of financial hardship,
and (effective June 1, 1996) subject to Section 19.7 regarding Portland
Accounts, a Participant may withdraw, as of any Valuation Date, an
amount from that portion of his Account not invested in the Pegasus
Stock Fund upon written application to the Savings Plan Committee made
at least 15 days before the date on
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which the Participant wishes the withdrawal to occur. The minimum
withdrawal is the lesser of $1,000 or 100 percent of the value of the
Participant's Vested Interest. The value of the Participant's Vested
Interest and the value of the withdrawal shall be determined under
Section 9.3
7. The first four lines of Section 10.3 of the Plan are
hereby deleted effective January 1, 1996 and replaced by the following:
10.3 Hardship Withdrawals of Before-Tax Contributions. A
Participant who has not attained age 59-1/2 may only withdraw an
amount from his Before-Tax Contributions Account, as a hardship
withdrawal, subject to the following rules --
8. The first phrase in Section 11.5 of the Plan is hereby
deleted effective May 15, 1996 and replaced by the following:
11.5 Security. Any loan to a Participant under the Plan
shall be secured by the pledge of all of the Participant's right,
title, and interest in his Accrued Benefit (other than his
Portland Account); * * *
9. Subsection (c) of Section 11.9 ("Administration [of
Loans]") of the Plan is hereby deleted effective January 1, 1996 and replaced by
the following:
(c) A Participant shall not be permitted to have
more than one loan outstanding under the Plan at any time.
(d) Effective June 1, 1996, see Section 19.8
regarding Portland Accounts.
10. A new Article XIX is added to the Plan effective May 15,
1996 to read as follows:
Article XIX
SPECIAL PROVISIONS CONCERNING PORTLAND BROADCASTING, INC.
19.1 Background. In January 1996, Portland
Broadcasting, Inc. ("Portland") became an Affiliate of the Company.
Effective May 15, 1996, Portland has adopted the Plan on behalf of its
eligible employees, in accordance with Article XVII.
Eligible employees of Portland participated in the
Portland Plan prior to May 15, 1996. The Portland Plan permitted
eligible employees to make elective deferral
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contributions, and permitted Portland to make discretionary
contributions on behalf of eligible employees. No discretionary
contributions were made to the Portland Plan.
19.2 Participation. An Eligible Employee who is
employed by Portland on May 15, 1996 and who completed one Year of
Eligibility Service before May 15, 1996 shall become a Participant in
the Plan on May 15, 1996. An Eligible Employee who did not complete one
Year of Eligibility Service before May 15, 1996 shall become a
Participant in the Plan in accordance with Section 2.1.
19.3 Merger of Portland Plan. Effective as of June
1, 1996, the Portland Plan and the trust thereunder shall be merged
with and into this Plan and the trust hereunder. Upon the merger, each
participant in the Portland Plan shall remain fully vested in his
account balance under the Portland Plan, and such account balance shall
be transferred to this Plan in the manner described in Section 19.4.
19.4 Transfer of Portland Plan Accounts. As soon as
administratively practicable after the effective date of the merger of
the Portland Plan with and into this Plan under Section 19.3, the
amount in the Portland Plan account of each Participant who was a
participant in the Portland Plan on May 31, 1996, shall be transferred
to a separate Portland Account under this Plan. A participant in the
Portland Plan who does not become an active Participant in this Plan
under Section 19.2 shall nevertheless be a Participant with respect to
amounts held in his Portland Account.
19.5 Vesting in Portland Account. The amounts
credited to a Participant's Portland Account shall be fully
vested at all times.
19.6 Investment of Portland Account
(a) Initial Investment. Amounts transferred to a
Participant's Portland Account under Section 19.4 shall be invested in
accordance with the Participant's most recent investment election under
Section 5.1. A Participant who has not previously made an investment
election under Section 5.1 shall be given the opportunity to make such
an election at the time of the transfer to his Portland Account.
(b) Reapportionment. Amounts credited to a
Participant's Portland Account shall be subject to any reapportionment
election under Section 5.1.
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19.7 No Withdrawals from Portland Account.
Notwithstanding Article X, there shall be no withdrawals from a
Participant's Portland Account.
19.8 No Loans from Portland Account.
Notwithstanding Article XI, there shall be no loans made from a
Participant's Portland Account.
19.9 Distributions from Portland Account.
Notwithstanding Sections 6.1, 6.2, 9.5(a), and 9.6, a Participant may
defer payment of amounts held in his Portland Account until the date
benefits are required to begin under Section 9.5(a)(2).
19.10 Qualified Retirement Annuity. The following
provisions shall apply with respect to a Participant's Portland Account
if, at the time of distribution, the value of the Participant's entire
Vested Interest exceeds (or at the time of any prior distribution
exceeded) $3,500 --
(a) Definitions. The following definitions shall
apply for purposes of this Section --
(1) "Benefit Commencement Date" shall mean the
first day of the first period for which an amount is paid as an annuity
or in any other form under the Plan.
(2) "Qualified Retirement Annuity" shall mean
--
(A) In the case of a Participant who is not
married on his Benefit Commencement Date, a single life
annuity with installment refund; and
(B) In the case of a Participant who is
married on his Benefit Commencement Date, a survivorship life
annuity with installment refund, where the surviving annuitant
is the Participant's Spouse and the survivorship percentage is
50 percent.
The Qualified Retirement Annuity shall be in the amount that can be
purchased with the balance of the Participant's Portland Account.
(b) Method of Payment of Portland Account
(1) Automatic Form of Payment of Portland
Account. Unless a Participant elects, under paragraph (2), an
alternative method of payment, his Portland Account shall be paid in
the form of a Qualified Retirement Annuity if the Participant does not
die prior to his Benefit Commencement
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<PAGE>
Date, except as otherwise provided in subsection (c) below (regarding
the payment of small benefits).
(2) Alternative Methods of Payment of Benefits.
Subject to Section 9.5 (regarding minimum required distributions), and
except as otherwise provided in subsection (c) below (regarding the
payment of small benefits), a Participant may elect, pursuant to a
qualified election as described in paragraph (3) below, not to receive
his Portland Account in the form of a Qualified Retirement Annuity, but
to have his Portland Account paid to him pursuant to any one of the
following methods of distribution as selected by the Participant (the
amount of the benefit to be distributed shall be the amount of benefit
which may be provided by the Participant's Portland Account) --
(A) single-sum payment;
(B) straight life annuity;
(C) single life annuity with certain
periods of five, 10 or 15 years;
(D) single life annuity with installment
refund;
(E) survivorship life annuity with
installment refund and survivor percentages of 50%, 66-2/3% or
100%;
(F) fixed period annuities for any period
of whole months which is not less than 60 and does not exceed
the life expectancy of the Participant and the named
Beneficiary where the life expectancy is not recalculated; or
(G) a series of installments chosen by the
Participant with a minimum payment each year beginning with
the year the Participant turns age 70-1/2.
The payment for the first year in which a minimum payment is required
under subparagraph (G) above will be made by April 1 of the following
calendar year. The payment for the second year and each successive year
will be made by December 31 of that year. The minimum payment will be
based on a period equal to the joint and last survivor expectancy of
the Participant and the Participant's Spouse (if any), where the joint
and last survivor expectancy is recalculated. The balance of the
Participant's Portland Account (if any) will be payable on the
Participant's death to his Beneficiary in a single sum.
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<PAGE>
(3) Qualified Election. A Participant's election to
receive his Portland Account in an optional form of benefit under
paragraph (2) above shall be in the form of a waiver of the Qualified
Retirement Annuity made by delivering written notice to the Savings
Plan Committee during the 90-day period ending on the Participant's
Benefit Commencement Date and, if the Participant is married, must be
consented to by the Participant's Spouse. The Spouse's consent to a
waiver must be irrevocable, must be witnessed by a Plan representative
appointed by a member of the Savings Plan Committee or by a notary
public, must be limited to a benefit for a specific alternate
Beneficiary (or a benefit payable during the life of the Participant),
and must specify the particular optional form of benefit elected by the
Participant. Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of the Plan representative
that written consent cannot be obtained because there is no Spouse or
because the Participant's Spouse cannot be located, the waiver shall be
deemed a qualified election. If the Spouse is legally incompetent to
give consent, the Spouse's legal guardian may give consent, even if the
guardian is the Participant. Also, if the Participant is legally
separated or has been abandoned (within the meaning of local law) and
the Participant has a court order to that effect, spousal consent shall
not be required unless a qualified domestic relations order (as defined
in section 414(p) of the Code) provides otherwise. Any consent
necessary under this provision shall be valid only with respect to the
Spouse who signs the consent, or, in the event of a deemed qualified
election, the designated Spouse (if any). Additionally, a Participant
may revoke a prior waiver without the consent of his Spouse at any time
before his Benefit Commencement Date. The number of revocations shall
not be limited. Any new waiver or change of the terms of a specific
consent shall require a new spousal consent.
(4) Notice to Former Portland Plan Participants
(A) Except as provided in subparagraph (B)
below, the Savings Plan Committee shall provide each
Participant who has a Portland Account, not more than 90 days
and not fewer than 30 days prior to his Benefit Commencement
Date, a written explanation of --
(I) the terms and conditions of the
Qualified Retirement Annuity, including a general description
of the eligibility conditions and other material features of
the optional forms of benefit and sufficient additional
information to explain the
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<PAGE>
relative values of the optional forms of benefit available
under the Plan;
(II) the Participant's right to make,
and the effect of, an election to waive the Qualified
Retirement Annuity;
(III) the rights of a Participant's
Spouse (if the Participant is married);
(IV) the Participant's right to make,
and the effect of, a revocation of a previous election to
waive the Qualified Retirement Annuity; and
(V) if the Participant has not attained
Normal Retirement Age, the Participant's right to defer
receipt of his Portland Account until the date benefits are
required to begin under Section 9.5(a)(2).
(B) The following distributions of a
Participant's Portland Account may commence fewer than 30 days
after the notice described in subparagraph (A) above is given
to the Participant --
(I) payment of a Participant's Portland
Account in the form of a Qualified Retirement Annuity on or
after the Participant's attainment of Normal Retirement Age;
(II) payment of a Participant's
Portland Account in the form of an involuntary single-sum
payment pursuant to subsection (c) below; or
(III) payment of a Participant's
Portland Account not described in (I) or (II) above provided
that --
(aa) the Savings Plan Committee
clearly informs the Participant that he has a right
to a period of at least 30 days after receiving the
notice described in subparagraph (A) above to
consider whether to waive the Qualified Retirement
Annuity and consent to a form of distribution other
than a Qualified Retirement Annuity, and, if
applicable, to consider whether to commence receipt
of his Portland Account before his Normal Retirement
Date;
(bb) after receiving the notice
described in subparagraph (A) above, the Participant
affirmatively elects a form of
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<PAGE>
distribution (with spousal consent, if required under
paragraph (3) above), and the Participant
affirmatively elects to commence receiving his
Portland Account (if distribution is to commence
prior to his Normal Retirement Date);
(cc) the Participant is permitted
to revoke his affirmative election at least until his
Benefit Commencement Date or, if later, at any time
prior to the expiration of the seven-day period that
begins the day after the notice described in
subparagraph (A) above is provided to the
Participant;
(dd) the Participant's Benefit
Commencement Date is after the date that the notice
described in subparagraph (A) above is provided to
the Participant; and
(ee) distribution of the
Participant's Portland Account in accordance with the
Participant's affirmative election does not commence
before the expiration of the seven-day period that
begins on the day after the notice described in
subparagraph (A) above is provided to the
Participant.
(c) Small Payments. If a Participant, Spouse, or
Beneficiary is entitled to receive monthly payments from the
Participant's Portland Account and if, as of the date of distribution,
the value of the Participant's entire Vested Interest does not exceed
(and has not at the time of any prior distribution exceeded) $3,500,
the payments shall be paid to the Participant, Spouse, or Beneficiary
in a single sum not later than the last day of the second Plan Year
following the Plan Year in which the Participant's termination of
employment or death occurs. The single-sum payment shall be in full
discharge of all obligations under the Plan with respect to the
Participant, Spouse, or Beneficiary.
(d) Provisions Applicable Only to Portland Account. The
provisions of this Section shall not apply to amounts in a
Participant's Account other than amounts in his Portland Account.
19.11 Preretirement Death Benefits. This Section shall
govern the distribution of the Portland Account of a Participant who
has a spouse to whom he has been continuously married throughout the
one-year period ending on the date of his death, and who dies before
his Benefit Commencement Date (as defined in Section
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19.10(a)(1)), unless the Participant's entire Vested Interest does not
exceed (and has not at the time of any prior distribution exceeded)
$3,500. If a Participant does not have a Spouse to whom he has been
continuously married throughout the one-year period ending on the date
of his death, and he dies before his Benefit Commencement Date,
distribution of his Portland Account shall be made in accordance with
Article VII.
(a) Qualified Preretirement Survivor Annuity.
Unless the Participant makes an election in accordance with Section
19.10(b)(3) with his Spouse's consent, the Participant's Portland
Account shall be paid to his Surviving Spouse in the form of a
qualified preretirement survivor annuity or, if the spouse so elects,
in a single-sum or any other form permitted under Section 19.10(b)(2).
A qualified preretirement survivor annuity is a life annuity with
installment refund payable to the Surviving Spouse in the amount which
can be purchased with the balance of the Participant's Portland
Account.
(b) Commencement of Payments. The qualified
preretirement survivor annuity described in subsection (a) above shall
commence to be paid as soon as practicable after the Participant's
death; provided, however, that payments shall not commence prior to the
date on which the Participant would have attained age 70-1/2 unless the
Spouse consents to the commencement of such payments at an earlier
date. If the Spouse dies prior to the date as of which benefit payments
are to commence, the Participant's Portland Account shall be
distributed in a single sum to the Participant's Beneficiary.
(c) Waiver of Qualified Preretirement Survivor
Annuity. A Participant may, with his Spouse's written consent in the
manner described in Section 19.10(b)(3), elect to waive the qualified
preretirement survivor annuity and to have his Portland Account
distributed to his Beneficiary in a single sum or in any other form
permitted under Section 19.10(b)(2) (other than a series of
installments if the Beneficiary is not the Spouse). Such election must
be made in writing on a form provided by the Savings Plan Committee
during the applicable election period set forth in subsection (d)
below. The Participant may revoke his waiver of the qualified
preretirement survivor annuity at any time without the consent of his
spouse; however, spousal consent is required for a new waiver.
(d) Election Period. A Participant's waiver of the
qualified preretirement survivor annuity, and his Spouse's consent to
such waiver, shall be valid only under the following circumstances --
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<PAGE>
(1) the designation is made on or after the first
day of the Plan Year in which the Participant attains age 35;
(2) the designation is made on or after the date of
the Participant's separation from service (and the Participant has not
returned to the employ of an Employer); or
(3) the Participant dies before separating from
service and before the first day of the Plan Year in which he would
have attained age 35.
If a Participant who has not separated from service waives the
qualified preretirement survivor annuity before the first day of the
Plan Year in which he attains age 35, such waiver shall not be valid in
the event of his death after such day (or after his separation from
service).
(e) Explanation. The Savings Plan Committee shall
provide each Participant with a Portland Account, within the period
beginning with the first day of the Plan Year in which the Participant
attains age 32 and ending with the close of the Plan Year in which the
Participant attains age 34 or, if later, during the period beginning
one year before and ending one year after he becomes a Participant, a
written explanation with respect to the death benefit comparable to
that required under Section 19.10(b)(4). In the case of a Participant
who separates from service before he attains age 35, such explanation
shall be provided during the period beginning one year before and
ending one year after such separation.
(f) Effect of Qualified Domestic Relations Order. To
the extent that the Plan treats a former spouse of a Participant as the
spouse of such Participant for purposes of sections 401(a)(11) and 417
of the Code pursuant to a qualified domestic relations order (as
defined in section 414(p) of the Code), the actual spouse of the
Participant shall not be treated as the spouse of such Participant for
such purposes. If, pursuant to a qualified domestic relations order,
more than one individual is a designated spouse, the amount of the
survivor annuity payable under this subsection (f) shall not exceed the
amount which would be paid if there were only one surviving spouse.
(g) Provisions Applicable Only to Portland Account. The
provisions of this Section shall not apply to amounts in a
Participant's Account other than amounts in his Portland Account.
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<PAGE>
19.13 Preservation of Optional Forms of Benefit. If
a Participant's entire Vested Interest exceeds (or has at the time of
any prior distribution exceeded) $3,500, a Participant shall have a
right to receive amounts held in his Portland Account in any optional
form of benefit which was available for such distribution under the
Portland Plan, provided that such optional form meets the requirements
of Section 9.5 of this Plan. This provision is intended to comply with
the requirements of section 411(d)(6) of the Code, and shall not apply
to the extent that section 411(d)(6) of the Code and regulations issued
thereunder would permit the elimination of any such optional form of
payment.
IN WITNESS WHEREOF, PEGASUS MEDIA & COMMUNICATIONS, INC. has
caused these presents to be duly executed this 14th day of May, 1996.
Attest: PEGASUS MEDIA & COMMUNICATIONS,
INC.
/s/ William E. Miles III By: /s/ Robert N. Verdecchio
- ------------------------ --------------------------------
William E. Miles III Robert N. Verdecchio
Senior Vice President
IN WITNESS WHEREOF, Portland Broadcasting, Inc., an Affiliate,
intending to adopt the Plan and become a Participating Employer thereunder
pursuant to Article XVII thereof, has caused these presents to be duly executed
this ___ day of May, 1996.
Attest: PORTLAND BROADCASTING, INC.
/s/ William E. Miles III By: /s/ Robert N. Verdecchio
- ------------------------- --------------------------------
William E. Miles III Robert N. Verdecchio
Senior Vice President
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<PAGE>
AMENDMENT NO. 2
TO THE
PEGASUS COMMUNICATIONS SAVINGS PLAN
(Effective January 1, 1996)
WHEREAS, Pegasus Media & Communications, Inc. (the "Company")
established the Pegasus Communications Savings Plan (the "Plan") effective
January 1, 1996, and has amended the Plan on one occasion thereafter;
WHEREAS, Section 15.1 of the Plan provides that, subject to
certain inapplicable limitations, the Board of Directors of the Company may
amend the Plan by written resolution at any time;
WHEREAS, the Company desires to amend the Plan (i) to reflect
the decision of the Trustees to purchase class A common stock of Pegasus
Communications Corporation (instead of class B non-voting common stock of
Pegasus Communications Holdings, Inc.), with Plan contributions to be used to
purchase Pegasus Stock, (ii) to eliminate the Call Option and Right of First
Refusal with respect to stock distributed from the Pegasus Stock Fund, (iii) to
revise the definition of Year Over Year Increase in Company-Wide Location Cash
Flow with respect to acquisitions, (iv) to provide that Company Additional
Contributions may be invested in the Pegasus Stock Fund only, and (v) to make
certain other changes;
NOW, THEREFORE, subject to approval by the District Director
of Internal Revenue, the Plan shall be amended effective September 30, 1996 as
follows:
1. Section 1.10 ("Call Option") of the Plan is hereby deleted.
2. Section 1.32 of the Plan is hereby deleted and replaced by
the following:
1.32 "Pegasus Stock" shall mean class A common stock of
Pegasus Communications Corporation.
3. Section 1.38 ("Right of First Refusal") of the Plan is
hereby deleted.
4. Subsection (b) of Section 1.51 ("Year Over Year Increase in
Company-Wide Location Cash Flow") of the Plan is hereby deleted and replaced by
the following:
<PAGE>
(b) Participating Employer Commences Participation. For
purposes of determining the excess of the Company-wide Location Cash Flow for a
year in which an employer first becomes a Participating Employer ("Year 1") over
the Company-wide Location Cash Flow for the preceding year ("Year 0"), the
Location Cash Flow attributable to the period in Year 1 during which the
employer was a Participating Employer shall be compared to the employer's income
- -- before management fees, depreciation, amortization (other than amortization
of film contracts), and incentive compensation (including contributions under
any qualified or nonqualified plan) -- from non-Pegasus operations during the
same period in Year 0. For purposes of determining the excess of the
Company-wide Location Cash Flow for the succeeding year ("Year 2") over the
Company-wide Location Cash Flow for Year 1, the Location Cash Flow attributable
to the period in Year 1 during which the employer was a Participating Employer
shall be compared to the Location Cash Flow during the same period in Year 2.
5. Section 3.7 ("Company Additional Contributions") of the
Plan is hereby amended by adding a new subsection (c) to read as follows:
(c) Form. Company Additional Contributions shall be made
either in the form of Pegasus Stock or in cash and used to purchase Pegasus
Stock. If made in Pegasus Stock, the value of such Pegasus Stock at the time of
contribution shall equal the cash amount determined by the Board of Directors
pursuant to subsection (a). Company Additional Contributions shall be held in
the Pegasus Stock Fund.
6. The first sentence of Section 5.1 of the Plan is hereby
deleted and replaced by the following:
5.1 Investment of Account Balance. Each Participant may
direct, at the time he commences participation, that his Account (other than
amounts in his Company Account) be invested in one or any combination of
Investment Funds made available by the Savings Plan Committee pursuant to
Section 5.2. * * *
7. The first sentence of subsection (b)(2) (regarding the
Pegasus Stock Fund) of Section 5.2 ("Investment Funds") of the Plan is hereby
deleted and replaced by the following:
(2) Acquisition of Pegasus Stock by the Trustees. The
Company may contribute shares of Pegasus Stock as Company Matching
Contributions, Company Additional Contributions, and/or Rollover Matching
Contributions to the Plan pursuant to Section 3.2(b), Section 3.7(c), and/or
Section 3.9(b), respectively,
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<PAGE>
or, pursuant to directions from the Savings Plan Committee, the Trustees may
purchase shares of Pegasus Stock using funds held by the Trustees under the Plan
or contributed to the Plan by the Company.
8. Subsection (b)(3) (regarding the Pegasus Stock Fund) of
Section 5.2 ("Investment Funds") of the Plan is hereby deleted and replaced by
the following:
(3) Valuation of Pegasus Stock. Transactions between the
Trustees and the Company or the Trustees and any other purchaser or seller of
Pegasus Stock shall be based on the then current fair market value of such
Pegasus Stock. For purposes of determining such value, fair market value shall
mean the closing price of Pegasus Stock on a registered securities exchange or
on an over-the-counter market on the last business day prior to the date of the
transaction on which Pegasus Stock traded.
9. The last sentence of subsection (b)(4) (regarding the Right
of First Refusal and the Call Option) of Section 5.2 ("Investment Funds") of the
Plan is hereby deleted.
10. Section 5.4 of the Plan is hereby deleted and replaced by
the following:
5.4 Investment Fund Designations. Company Matching
Contributions, Company Additional Contributions, and Rollover Matching
Contributions shall be invested in the Pegasus Stock Fund. All other
contributions shall be invested in whichever Investment Fund(s) the Participant
designates, either --
(a) 100 percent in one Fund; or
(b) in two or more Funds on the basis of a distribution of
contributions between them in multiples of 10 percent.
To the extent a Participant does not specify how contributions made on his
behalf are to be invested, they shall be invested in the Government Securities
Trust Money Market Series fund.
11. Subsection (b) of Section 10.1 ("General Rules for All
Withdrawals") of the Plan is hereby deleted and replaced by the following:
(b) From Accounts. Withdrawals from a Participant's Account
(other than from that portion invested
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<PAGE>
in the Pegasus Stock Fund) shall be made in the following order --
(1) first, from the Participant's Rollover Account; and
(2) last, from the Participant's Before-Tax Contributions
Account.
No amounts may be withdrawn from the Pegasus Stock Fund under this Article.
IN WITNESS WHEREOF, PEGASUS MEDIA & COMMUNICATIONS, INC. has
caused these presents to be duly executed this 8th day of October, 1996.
Attest: PEGASUS MEDIA & COMMUNICATIONS,
INC.
/s/ William E. Miles III By: /s/ Robert N. Verdecchio
- ---------------------------- ----------------------------
William E. Miles III Robert N. Verdecchio
Senior Vice President
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<PAGE>
PEGASUS COMMUNICATIONS PUERTO RICO
SAVINGS PLAN
(Effective October 1, 1996)
<PAGE>
PEGASUS COMMUNICATIONS
SAVINGS PLAN
(Effective October 1, 1996)
TABLE OF CONTENTS
Page
PREAMBLE..................................................................... 1
ARTICLE I DEFINITIONS................................................ 1
1.1 "Account".................................................. 1
1.2 "Accrued Benefit".......................................... 1
1.3 "Affiliate"................................................ 1
1.4 "Before-Tax Contributions"................................. 1
1.5 "Before-Tax Contributions Account"......................... 1
1.6 "Beneficiary".............................................. 1
1.7 "Board of Directors"....................................... 2
1.8 "Break in Service"......................................... 2
1.9 "Code"..................................................... 2
1.10 "Company".................................................. 2
1.11 "Company Additional Contributions"......................... 2
1.12 "Company Account".......................................... 2
1.13 "Company Matching Contributions"........................... 2
1.14 "Disability"............................................... 2
1.15 "Eligible Employee"........................................ 2
1.16 "Employee"................................................. 2
1.17 "Employment Date".......................................... 3
1.18 "ERISA".................................................... 3
1.19 "Forfeitures".............................................. 3
1.20 "Hour of Service".......................................... 3
1.21 "Investment Funds"......................................... 5
1.22 "Limitation Compensation".................................. 5
1.23 "Limitation Year".......................................... 5
1.24 "Location Cash Flow"....................................... 5
1.25 "Normal Retirement Age".................................... 5
1.26 "Normal Retirement Date"................................... 5
1.27 "Participant".............................................. 5
1.28 "Participating Employer"................................... 5
1.29 "Pegasus Stock"............................................ 5
1.30 "Pegasus Stock Fund"....................................... 5
1.31 "Plan"..................................................... 5
1.32 "Plan Year"................................................ 5
1.33 "Postponed Retirement Date"................................ 5
1.34 "Reemployment Date"........................................ 6
1.35 "Rollover Account"......................................... 6
1.36 "Rollover Matching Contributions".......................... 6
1.37 "Salary"................................................... 6
1.38 "Savings Plan Committee"................................... 6
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Page
1.39 "Spouse" or "Surviving Spouse"............................. 6
1.40 "Trust Agreement".......................................... 6
1.41 "Trustees"................................................. 6
1.42 "Trust Fund"............................................... 6
1.43 "Valuation Date"........................................... 6
1.44 "Vested Interest".......................................... 6
1.45 "Year of Eligibility Service".............................. 6
1.46 "Year of Vesting Service".................................. 7
1.47 "Year Over Year Increase in Company-Wide Location Cash
Flow"..................................................... 7
ARTICLE II ELIGIBILITY AND PARTICIPATION.............................. 7
2.1 Eligibility................................................ 7
2.2 Application to Make Contributions.......................... 8
2.3 Rehired Employees.......................................... 8
2.4 Transfers.................................................. 9
ARTICLE III CONTRIBUTIONS TO PARTICIPANTS' ACCOUNTS.................... 9
3.1 Amount of Before-Tax Contributions......................... 9
3.2 Company Matching Contributions............................. 9
3.3 Savings Plan Committee Alternatives........................ 10
3.4 Change in Amount of Before-Tax Contributions............... 10
3.5 Suspension of Before-Tax Contributions..................... 10
3.6 Resumption of Before-Tax Contributions..................... 10
3.7 Company Additional Contributions........................... 11
3.8 Allocation of Company Additional Contributions............. 11
3.9 Rollover Matching Contributions............................ 12
3.10 Return of Contributions to Company......................... 12
3.11 Paid Leave of Absence...................................... 13
3.12 Rollover Contributions and Direct Transfers................ 13
3.13 Vesting and Distribution of Rollover Account............... 13
3.14 Profits Required........................................... 14
ARTICLE IV LIMITATIONS ON CONTRIBUTIONS............................... 14
4.1 Definitions................................................ 14
4.2 Limitation on Before-Tax Contributions..................... 15
4.3 Distribution of Excess Deferrals........................... 16
4.4 Distribution of Excess Contributions....................... 17
ARTICLE V VALUATION AND INVESTMENT OF PARTICIPANTS' ACCOUNTS......... 18
5.1 Investment of Account Balance.............................. 18
5.2 Investment Funds........................................... 18
5.3 Reinvestment............................................... 19
5.4 Investment Fund Designations............................... 19
5.5 Valuation of Investment Funds.............................. 19
5.6 Valuation of Participant's Account in Investment Funds..... 19
ARTICLE VI ELIGIBILITY FOR BENEFITS................................... 20
6.1 Normal Retirement Benefits................................. 20
6.2 Postponed Retirement Benefits.............................. 20
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<PAGE>
Page
6.3 Termination Benefits....................................... 20
6.4 Reemployment............................................... 21
ARTICLE VII DEATH BENEFITS............................................. 22
7.1 Designation of Beneficiary and Form of Payment of Death
Benefit.................................................... 22
7.2 Requirements for Spouse's Consent.......................... 22
7.3 Payment of Benefits........................................ 23
ARTICLE VIII VESTING.................................................... 23
8.1 Vested Interest in Before-Tax Contributions Account........ 23
8.2 Vested Interest in Company Account......................... 23
8.3 Forfeitures................................................ 23
8.4 No Divestment for Cause.................................... 23
ARTICLE IX PAYMENT OF BENEFITS........................................ 24
9.1 Method of Payment.......................................... 24
9.2 Form of Payment............................................ 24
9.3 Valuation of Accounts...................................... 24
9.4 Entitlement to Benefits.................................... 24
9.5 Requirements Concerning Distributions...................... 24
9.6 Participant's Consent to Distribution of Benefits.......... 25
9.7 Direct Rollovers of Eligible Rollover Distributions Made
From This Plan............................................. 26
ARTICLE X WITHDRAWALS................................................ 27
10.1 General Rules for All Withdrawals.......................... 27
10.2 Withdrawals On or After Attainment of Age 59 1/2........... 27
10.3 Hardship Withdrawals of Before-Tax Contributions........... 27
ARTICLE XI LOANS...................................................... 29
11.1 In General................................................. 29
11.2 Amount..................................................... 29
11.3 Valuation.................................................. 29
11.4 Repayment.................................................. 29
11.5 Security................................................... 30
11.6 Distribution of Benefits................................... 30
11.7 Default.................................................... 30
11.8 Interest................................................... 31
11.9 Administration............................................. 31
11.10 Earmarking................................................. 31
ARTICLE XII ALLOCATION OF FIDUCIARY RESPONSIBILITY..................... 31
12.1 Allocation................................................. 31
12.2 Exclusive Responsibility................................... 32
12.3 Co-Fiduciary Liability..................................... 32
12.4 Interest of Participants................................... 32
12.5 Employment of Advisers..................................... 32
12.6 Standards of Fiduciary Conduct............................. 32
12.7 Limitation on Fiduciary Liability.......................... 33
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Page
ARTICLE XIII ADMINISTRATION............................................. 33
13.1 Savings Plan Committee..................................... 33
13.2 Quorum..................................................... 33
13.3 Administrative Rules....................................... 33
13.4 Authority and Administrative and Professional Assistance... 33
13.5 Decision of Savings Plan Committee......................... 34
13.6 Accounting................................................. 34
13.7 Claims Procedure........................................... 34
13.8 Compensation............................................... 35
13.9 Plan Records............................................... 35
13.10 Funding Policy............................................. 35
ARTICLE XIV TRUST FUND................................................. 36
14.1 Trust Agreement............................................ 36
14.2 Exclusive Benefit Rule..................................... 36
ARTICLE XV AMENDMENT, TERMINATION, MERGER AND SUCCESSOR EMPLOYER...... 36
15.1 Amendment.................................................. 36
15.2 Discontinuance and Termination............................. 37
15.3 Merger, Consolidation, or Transfer......................... 37
15.4 Successor Employer......................................... 38
ARTICLE XVI RELATING TO THE PARTICIPATING EMPLOYERS.................... 38
16.1 Participating Employers.................................... 38
16.2 Action by Board of Directors............................... 38
ARTICLE XVII MISCELLANEOUS.............................................. 38
17.1 Company Notification....................................... 38
17.2 No Right to Employment..................................... 38
17.3 No Assignment or Alienation................................ 39
17.4 Unclaimed Benefits......................................... 39
17.5 Military Leave............................................. 39
17.6 Titles..................................................... 39
17.7 Pronouns; Number........................................... 39
17.8 Facility of Payment........................................ 39
17.9 Expenses................................................... 40
17.10 Savings Provision.......................................... 40
17.11 Governing Law.............................................. 40
APPENDIX A - Approved Investment Funds as of October 1, 1996.................A-1
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<PAGE>
PEGASUS COMMUNICATIONS PUERTO RICO
SAVINGS PLAN
(Effective October 1, 1996)
PREAMBLE
WHEREAS, MCT Cablevision, Limited Partnership ("MCT") desires to
establish a profit sharing plan containing a cash or deferred arrangement under
sections 1165(a) and 1165(e) of the Puerto Rico Internal Revenue Code of 1994,
as amended, for its eligible employees;
NOW, THEREFORE, effective October 1, 1996, and subject to approval by
the Puerto Rico Treasury Department, MCT hereby establishes the Pegasus
Communications Puerto Rico Savings Plan under the following terms and
conditions:
ARTICLE I
DEFINITIONS
In this Plan, unless a different meaning is plainly required by the
context, the following words and phrases, as used herein, shall have the
following meanings --
1.1 "Account" shall mean, as of any applicable date, the aggregate of a
Participant's Before-Tax Contributions Account, Company Account, and Rollover
Account.
1.2 "Accrued Benefit" shall mean the amount credited to a Participant's
Account under the Plan.
1.3 "Affiliate" shall mean the Company and any corporation which is a
member of a controlled group of corporations (as described in section 210(c) of
ERISA) which includes the Company and any trade or business (whether or not
incorporated) which is under common control (as described in section 210(d) of
ERISA) with the Company.
1.4 "Before-Tax Contributions" shall mean those contributions
authorized by a Participant pursuant to Section 3.1. Before-Tax Contributions
shall be subject to the limitations described in Section 4.2.
1.5 "Before-Tax Contributions Account" shall mean the sub-account
established for the portion of a Participant's Account attributable to his
Before-Tax Contributions.
1.6 "Beneficiary" shall mean the person or legal entity designated by
the Participant to receive benefits payable under the Plan after the
Participant's death, or the personal or legal representative of a deceased
Participant. If no Beneficiary is designated by the Participant or if no
Beneficiary survives the Participant, the Beneficiary shall be the
<PAGE>
Participant's Spouse if the Participant has a surviving Spouse; otherwise the
Beneficiary shall be the Participant's estate.
1.7 "Board of Directors" shall mean the Board of Directors of MCT
Cablevision, Ltd., the sole general partner of MCT Cablevision, Limited
Partnership.
1.8 "Break in Service" shall mean a 12-month period beginning on an
Employee's Employment Date or Reemployment Date (as applicable) or an
anniversary thereof during which the Employee does not complete more than 500
Hours of Service.
1.9 "Code" shall mean the Puerto Rico Internal Revenue Code of 1994, as
amended.
1.10 "Company" shall mean MCT Cablevision, Limited Partnership and any
other Participating Employer.
1.11 "Company Additional Contributions" shall mean those contributions
made by the Company pursuant to Section 3.7.
1.12 "Company Account" shall mean the sub-account established for the
portion of a Participant's Account attributable to Company Additional
Contributions, Company Matching Contributions and Rollover Matching
Contributions.
1.13 "Company Matching Contributions" shall mean those contributions
made by the Company pursuant to Section 3.2.
1.14 "Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or to be of long continued
or indefinite duration. The permanence and degree of such impairment shall be
supported by medical evidence satisfactory to the Savings Plan Committee.
1.15 "Eligible Employee" shall mean an Employee of the Company except
for --
(a) any Employee who is a member of a collective bargaining
unit, unless the members of the unit are eligible to become Participants in the
Plan pursuant to the terms of the unit's collective bargaining agreement with
the Company;
(b) any leased employee; and
(c) any non-resident alien who receives no earned income which
constitutes Puerto Rico source income.
1.16 "Employee" shall mean anyone employed by the Company or any other
Affiliate.
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<PAGE>
1.17 "Employment Date" shall mean the date on which an Employee
completes his first Hour of Service.
1.18 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.19 "Forfeitures" shall mean the non-vested portion of the Company
Account that the Participant is not entitled to upon termination of employment.
1.20 "Hour of Service" shall mean --
(a) (1) An "Hour of Service" is each hour for which an
Employee is paid, or entitled to payment, for the performance of duties for an
Affiliate.
(2) An "Hour of Service" is also each hour for which
an Employee is paid, or entitled to payment, by an Affiliate on account of a
period of time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or leave of
absence. Notwithstanding the preceding sentence --
(A) No more than 501 Hours of Service shall
be credited under this subsection (a)(2) to an Employee on account of any single
continuous period (whether or not the period occurs in a single service
computation period) during which the Employee performs no duties;
(B) Hours of Service shall not be credited
under this subsection (a)(2) to an Employee for payments made or due under a
plan maintained solely for the purpose of complying with any applicable workers'
compensation, unemployment compensation or disability insurance law;
(C) Hours of Service shall not be credited
under this subsection (a)(2) to an Employee for any payment which solely
reimburses him for medical or medically related expenses he has incurred; and
(D) Hours of Service shall not be credited
under this subsection (a)(2) to an Employee for any payments made or due to him
under this Plan or any other plan of deferred compensation which is maintained
by an Affiliate.
(3) An "Hour of Service" is also each hour for which
back pay, irrespective of mitigation of damages, is either awarded or agreed to
by an Affiliate, provided that the same Hours of Service shall not be credited
under subsection (a)(1) or subsection (a)(2) above and under this subsection
(a)(3).
(b) Solely for the purpose of determining whether an Employee
has incurred a Break in Service, "Hour of Service" shall also include the
following hours --
-3-
<PAGE>
(1) An Employee shall receive credit for each
additional hour which is part of his customary work week during which he is on
an unpaid leave of absence authorized by an Affiliate under its standard
personnel practices, provided the Employee resumes employment with an Affiliate
upon the expiration of such leave.
(2) Effective for absences from work which begin on
or after January 1, 1985, an Employee who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which would
otherwise have been credited to such Employee but for such absence, or in any
case in which such Hours of Service cannot be determined, eight Hours of Service
per day of such absence. The total number of hours treated as Hours of Service
under this paragraph (2) for any absence from work for maternity or paternity
reasons, when aggregated with any hours credited under any other provision of
this Section which relate to the same absence, shall not exceed 501. An absence
from work for maternity or paternity reasons means a continuous absence --
(A) by reason of the pregnancy of the
Employee;
(B) by reason of the birth of a child of the
Employee;
(C) by reason of the placement of a child
with the Employee in connection with the adoption of the child by the Employee;
or
(D) for purposes of caring for the child for
a period beginning immediately following such birth or placement.
The Hours of Service credited under this paragraph
(2) shall be credited in the service computation period in which the absence
begins if the crediting is necessary to prevent a Break in Service in that
service computation period, or, in all other cases, in the following service
computation period.
(c) In the case of a payment which is made or due on account
of a period during which an Employee performs no duties, and which results in
the crediting of Hours of Service under subsection (a)(2) above, or in the case
of an award or agreement for back pay, to the extent that such award or
agreement is made with respect to a period described in subsection (a)(2) above,
the number of Hours of Service to be credited shall be determined in accordance
with the applicable regulations prescribed by the Secretary of Labor and set
forth in 29 C.F.R. Section 2530.200b-2(b).
(d) Hours of Service described in subsections (a)(1), (a)(2)
and (a)(3) above shall be credited to service computation periods in accordance
with the applicable regulations prescribed by the Secretary of Labor and set
forth in 29 C.F.R. Section 2530.200b-2(c).
(e) For purposes of determining Years of Vesting Service and
eligibility for Company Matching Contributions, Company Additional
Contributions, and Rollover Matching Contributions, an Employee shall receive
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<PAGE>
credit for Hours of Service with an Affiliate only to the extent that such Hours
are completed during the period that the employer for whom the services are
performed is an Affiliate.
1.21 "Investment Funds" shall mean the funds made available by the
Savings Plan Committee under the Trust Fund pursuant to Section 5.2.
1.22 "Limitation Compensation" shall mean a Participant's Salary for a
Limitation Year, except that contributions (if any) made by the Company on
behalf of the Participant, by salary reduction pursuant to the Participant's
election, to an arrangement described in section 1165(e) of the Code.
1.23 "Limitation Year" shall mean the Plan Year.
1.24 "Location Cash Flow" shall mean income from Company operations
before management fees, depreciation, amortization (other than amortization of
film contracts), and incentive compensation (including contributions under the
Plan).
1.25 "Normal Retirement Age" shall mean age 65.
1.26 "Normal Retirement Date" shall mean the first day of the month
coincident with or next following a Participant's attainment of Normal
Retirement Age.
1.27 "Participant" shall mean an Eligible Employee who has met the
requirements for participation in the Plan as provided in Article II, or a
former Employee with an undistributed Vested Interest.
1.28 "Participating Employer" shall mean an Affiliate which has adopted
the Plan and become a participating employer in the Plan pursuant to Article
XVII.
1.29 "Pegasus Stock" shall mean class A common stock of Pegasus
Communications Corporation.
1.30 "Pegasus Stock Fund" shall mean the Investment Fund maintained by
the Trustees within the Trust to hold Pegasus Stock pursuant to Section 5.2.
1.31 "Plan" shall mean the Pegasus Communications Puerto Rico Savings
Plan, as set forth in this document and as it may be amended from time to time.
1.32 "Plan Year" shall mean each 12-consecutive-month period commencing
on January 1 and ending on December 31.
1.33 "Postponed Retirement Date" shall mean the first day of any
calendar month after a Participant's Normal Retirement Date and coinciding with
or first following his actual retirement from the Company and all Affiliates.
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<PAGE>
1.34 "Reemployment Date" shall mean the date on which an Employee
completes his first Hour of Service following his most recent Break in Service.
1.35 "Rollover Account" shall mean the sub-account established for the
portion of a Participant's Account attributable to a rollover amount described
in Section 3.12.
1.36 "Rollover Matching Contributions" shall mean those contributions
made by the Company pursuant to Section 3.9.
1.37 "Salary" shall mean the amount reported for a Plan Year by the
Company in Box 12 of the Participant's 499-R-2/W-2 PR-Withholding Statement and
any successor thereto. "Salary" shall also include contributions made by the
Company on behalf of the Participant, by salary reduction pursuant to the
Participant's election, (i) to an arrangement described in section 1165(e) of
the Code.
1.38 "Savings Plan Committee" shall mean the committee appointed to
administer the Plan pursuant to Article XIII.
1.39 "Spouse" or "Surviving Spouse" shall mean the spouse or surviving
spouse of a Participant, provided that a former spouse shall be treated as the
spouse or surviving spouse to the extent provided under a qualified domestic
relations order (as defined in section 206(d) of ERISA.
1.40 "Trust Agreement" shall mean the agreement entered into between
the Company and the Trustees to set up a trust to carry out the purposes of the
Plan.
1.41 "Trustees" shall mean the Trustees appointed under the Trust
Agreement.
1.42 "Trust Fund" shall mean the assets held in trust for Plan purposes
under the Trust Agreement, including those invested in group annuity or
insurance contracts.
1.43 "Valuation Date" shall mean the date as of which the Investment
Funds are valued and Account balances determined under Article V, which shall be
each business day.
1.44 "Vested Interest" shall mean the portion of a Participant's
Account which is or has become nonforfeitable under Article VIII.
1.45 "Year of Eligibility Service" shall mean each successive 12-month
period from an Employee's Employment or Reemployment Date during which he
completes at least 1,000 Hours of Service. For purposes of determining Years of
Eligibility Service, an Employee shall receive credit for an Hour of Service
notwithstanding the fact that such Hour was completed with an employer prior to
the date the employer became an Affiliate by acquisition or otherwise.
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1.46 "Year of Vesting Service" shall mean each year from an Employee's
Employment or Reemployment Date during which he completes at least 1,000 Hours
of Service. All of an Employee's Years of Vesting Service shall be taken into
account for purposes of determining his Vested Interest under the Plan, except
that Years of Vesting Service completed before a Break in Service shall not be
taken into account if the Employee had no Vested Interest when the Break in
Service occurred, and if the number of consecutive Breaks in Service equals or
exceeds the greater of (i) the number of his Years of Vesting Service prior to
the Breaks in Service, or (ii) five years.
1.47 "Year Over Year Increase in Company-Wide Location Cash Flow" shall
mean an amount determined as follows:
(a) In General. Except as provided in subsection (b) and
subsection (c) below, the Year Over Year Increase in Company-Wide Location Cash
Flow with respect to any year shall equal the excess of the Company-wide
Location Cash Flow for such year over the Company-wide Location Cash Flow for
the preceding year. The Year Over Year Increase in Company-Wide Location Cash
Flow shall be determined on a pro forma basis by the Board of Directors or a
committee thereof.
(b) Participating Employer Commences Participation. For
purposes of determining the excess of the Company-wide Location Cash Flow for a
year in which an employer first becomes a Participating Employer ("Year 1") over
the Company-wide Location Cash Flow for the preceding year ("Year 0"), the
Location Cash Flow attributable to the period in Year 1 during which the
employer was a Participating Employer shall be compared to the employer's income
- -- before management fees, depreciation, amortization (other than amortization
of film contracts), and incentive compensation (including contributions under
any qualified or nonqualified plan) -- from non-Pegasus operations during the
same period in Year 0. For purposes of determining the excess of the
Company-wide Location Cash Flow for the succeeding year ("Year 2") over the
Company-wide Location Cash Flow for Year 1, the Location Cash Flow attributable
to the period in Year 1 during which the employer was a Participating Employer
shall be compared to the Location Cash Flow during the same period in Year 2.
(c) Participating Employer Ceases Participation. With respect
to an employer who ceases to be a Participating Employer, the Location Cash Flow
attributable to such an employer in the year of such cessation and in the year
preceding such cessation shall not be taken into account for purposes of
determining (i) the excess of the Company-wide Location Cash Flow for the year
of such cessation over the Company-wide Location Cash Flow for the year
preceding such cessation, and (ii) the excess of the Company-wide Location Cash
Flow for the year of such cessation over the Company-wide Location Cash Flow for
the year immediately following such cessation.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility. An Eligible Employee whose Employment Date is before
October 1, 1996 shall become a Participant in the Plan on October 1, 1996. An
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Eligible Employee whose Employment Date is on or after October 1, 1996 shall
become a Participant in the Plan on the first day of the first calendar quarter
coincident with or next following the date he completes one Year of Eligibility
Service.
2.2 Application to Make Contributions. An Eligible Employee who is
scheduled to become a Participant under Section 2.1 shall complete a form
provided by the Company in order --
(a) to authorize regular payroll reduction contributions and
indicate the amounts under Article III;
(b) to make an Investment Fund designation(s) under Section
5.1;
(c) to name a Beneficiary under Section 7.1; and
(d) to establish a legally binding salary reduction agreement.
The form described above shall provide that if the Savings
Plan Committee determines that all or any part of the amount elected by the
Participant as Before-Tax Contributions may not be contributed to the Trust
because of the limitations set forth in Article IV, the Company shall not be
required to make such contributions to the Trust, and instead shall pay the
amount which is not contributed directly to the Participant as additional
taxable compensation. If a Participant is transferred to employment with the
Company or an Affiliate which is not covered by the Plan, or if he separates
from service, his salary reduction agreement shall automatically terminate.
The Participant's first Before-Tax Contributions deposit shall
be made from the first payroll period beginning in the calendar quarter
beginning after he submits the form described above, provided the form is
received by the Savings Plan Committee or its delegate at least 15 calendar days
before the first day of that calendar quarter.
The Savings Plan Committee shall keep, for each Participant, a
Participant's Account showing his interest and other relevant data under the
Plan and in the Trust Fund. Each Participant shall receive a written statement
of his Account quarterly and upon any distribution to him. In keeping these
Accounts, the Savings Plan Committee shall rely on the Trust Fund valuations
under the terms of the Plan and Trust Agreement.
2.3 Rehired Employees. If an Employee (whether or not he has become a
Participant) who has no Vested Interest terminates employment and incurs a Break
in Service, and if the number of consecutive Breaks in Service equals or exceeds
the greater of (i) the number of his Years of Eligibility Service prior to the
Breaks in Service, or (ii) five years, then, in the event he is rehired, he
shall be treated as a new Employee for all purposes of the Plan.
In all other cases where an Employee leaves the Company after
becoming a Participant and is later rehired, he shall again become a Participant
on his Reemployment Date and may make contributions under the Plan pursuant to
Section 2.2, treating his Reemployment Date as though it were the
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first day of a calendar quarter, provided the form described in Section 2.2 is
received as part of his reemployment process.
In all other cases where an Employee leaves the Company before
becoming a Participant and is later rehired, he shall become a Participant under
the provisions of Section 2.1, counting his Year(s) of Eligibility Service (if
any) completed before he left the Company.
2.4 Transfers
(a) Transfer from Covered Employment. If a Participant is
transferred from employment as an Eligible Employee to other employment with the
Company, or to employment with an Affiliate which has not adopted the Plan, he
shall not thereby incur a Break in Service, and his subsequent Years of Vesting
Service with the Company shall be taken into account for purposes of vesting in
his Company Account which he accrued under the Plan prior to the transfer; but
he shall not be entitled to have any additional contributions made on his behalf
to his Account under the Plan after the transfer.
(b) Transfer to Covered Employment. If an Employee is
transferred from employment with the Company which is not covered by the Plan,
or from employment with an Affiliate which has not adopted the Plan, to
employment as an Eligible Employee, his Years of Eligibility Service prior to
such transfer shall be taken into account in determining his eligibility to
participate. If such transferred Employee satisfies the service requirements of
this Article, he shall commence participation in the Plan immediately upon his
transfer to employment as an Eligible Employee.
ARTICLE III
CONTRIBUTIONS TO PARTICIPANTS' ACCOUNTS
3.1 Amount of Before-Tax Contributions. Effective as of the first
payday on of after December 1, 1996, each Participant may direct the Company to
make Before-Tax Contributions on his behalf by notifying the Company pursuant to
Section 2.2 and authorizing the reduction of his Salary by a whole percentage of
two percent to a maximum of six percent. Before-Tax Contributions shall be
subject to the limitations of Article IV. The Before- Tax Contributions shall be
credited to the Participant's Before-Tax Contributions Account.
3.2 Company Matching Contributions
(a) Participants Eligible for Company Matching Contributions.
Company Matching Contributions to the Plan for a Plan Year shall be made on
behalf of each Participant (i) who has authorized contributions under Section
3.1 and who has elected under Section 5.1 that all or any part of his Before-Tax
Contributions for the Plan Year be invested in the Pegasus Stock Fund at the
time of their initial contribution to the Plan, (ii) who in the Plan Year
completed 1,000 or more Hours of Service for the Company, and (iii) who was an
Employee of the Company on the last day of the Plan Year. Notwithstanding the
preceding clauses (ii) and (iii), a Participant or his Beneficiary, as the case
may be, shall be entitled to a Company Matching
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Contribution on his behalf for the Plan Year in which the Participant's
employment terminates on or after his Normal Retirement Date, terminates because
of death, or terminates by reason of Disability, regardless of whether the
Participant was an Employee of the Company on the last day of the Plan Year.
(b) Amount and Form of Company Matching Contributions
(1) Amount. The Company shall contribute to the Trust
- -- on behalf of each Participant who has authorized Before-Tax Contributions
under Section 3.1 -- an amount that, at the time of contribution, equals 100
percent of the cash amount of such Before-Tax Contributions that are, pursuant
to the Participant's election under Section 5.1, invested in the Pegasus Stock
Fund at the time of their initial contribution to the Plan. Past Before-Tax
Contributions that are reapportioned from another Investment Fund to the Pegasus
Stock Fund and current Before-Tax Contributions that are initially invested in
an Investment Fund other than the Pegasus Stock Fund shall not be matched by the
Company to any extent. Company contributions made pursuant to this subsection
(b) shall be reduced by Forfeitures.
(2) Form. Company Matching Contributions shall be
made either in the form of Pegasus Stock or in cash and used to purchase Pegasus
Stock, and shall be credited to the Participant's Company Account. If made in
Pegasus Stock, the value of such Pegasus Stock at the time of contribution shall
equal the cash amount of the Participant's Before-Tax Contributions that are
described in the first sentence of paragraph (1) above. Company Matching
Contributions shall be held in the Pegasus Stock Fund.
(c) Time of Contributions. The Company Matching Contributions
for each Plan Year shall be paid to the Trustees no later than the due date
(including extensions of time) for filing the Company's Puerto Rico income tax
return for the Company's taxable year coincident with the Plan Year.
3.3 Savings Plan Committee Alternatives. The Savings Plan Committee
shall monitor periodically the level of Participants' Before-Tax Contributions
to lessen the likelihood of a violation of the limitations of Section 4.2. If
the Savings Plan Committee determines that on the basis of current levels of
Before-Tax Contributions, the limitations of Section 4.2 would be violated for
any Plan Year, the Savings Plan Committee may make such adjustments for the
remainder of the Plan Year in the percentage of one or more Participants' Salary
that can be designated as Before-Tax Contributions as the Savings Plan Committee
in its discretion deems necessary to prevent such a violation.
3.4 Change in Amount of Before-Tax Contributions. Once a calendar
quarter, a Participant may change the amount of his Before-Tax Contributions by
giving 15 days' written notice to the Company before the start of the calendar
quarter when the change will be effective.
3.5 Suspension of Before-Tax Contributions. Once a calendar quarter, a
Participant may suspend his Before-Tax Contributions, by giving 15 days' prior
written notice to the Company.
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3.6 Resumption of Before-Tax Contributions. A Participant whose
Before-Tax Contributions have been suspended under Section 3.5 may resume making
Before-Tax Contributions effective the first payroll period beginning in any
calendar quarter by giving 15 days' written notice to the Company before the
start of the calendar quarter when the resumption will be effective.
3.7 Company Additional Contributions
(a) Amount. The Company may, in the sole discretion of the
Board of Directors, contribute to the Plan, for each Plan Year, a percentage of
the Year Over Year Increase in Company-Wide Location Cash Flow. The amount of
the Company's contribution to the Plan shall be determined for such Plan Year by
the Board of Directors or a Committee thereof. However, the amount of Company
Additional Contributions for any Plan Year shall not exceed the amount allowable
as a deduction for computing Puerto Rico income tax under section 1023(n) of the
Code for the Company's taxable year which includes the last day of such Plan
Year.
(b) Time of Contributions. Company Additional Contributions
(if any) for any Plan Year shall be paid to the Trustees no later than the due
date (including extensions of time) for filing the Company's Puerto Rico income
tax return for the Company's taxable year coincident with the Plan Year.
(c) Form. Company Additional Contributions shall be made
either in the form of Pegasus Stock or in cash and used to purchase Pegasus
Stock. If made in Pegasus Stock, the value of such Pegasus Stock at the time of
contribution shall equal the cash amount determined by the Board of Directors
pursuant to subsection (a). Company Additional Contributions shall be held in
the Pegasus Stock Fund.
3.8 Allocation of Company Additional Contributions
(a) Participants Entitled to Allocation. Company Additional
Contributions to the Plan for a Plan Year shall be allocated to the Company
Account of each Participant (i) who in the Plan Year completed 1,000 or more
Hours of Service for the Company, and (ii) who was an Employee of the Company on
the last day of the Plan Year. Notwithstanding the preceding clause (ii), a
Participant or his Beneficiary, as the case may be, shall be entitled to an
allocation for the Plan Year in which the Participant's employment terminates on
or after his Normal Retirement Date, or because of death or by reason of
Disability, regardless of whether the Participant was an Employee of the Company
on the last day of the Plan Year.
(b) Allocation Method. As of December 31 of each Plan Year for
which the Company makes Company Additional Contributions, such Company
Additional Contributions shall be allocated to the Company Account of each
Participant entitled to an allocation for the Plan Year under subsection (a)
above in the same proportion that the Participant's Salary for the Plan Year
bears to the total Salary of all Participants entitled to an allocation for the
Plan Year.
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3.9 Rollover Matching Contributions
(a) Participants Eligible for Rollover Matching Contributions.
Rollover Matching Contributions to the Plan for a Plan Year shall be made on
behalf of each Nonhighly Compensated Employee (as defined in Section 4.1(i)) (i)
who has made a rollover contribution (as defined in Section 3.12(b)) in such
Plan Year, (ii) who has elected under Section 5.1 that all or any part of such
rollover contribution be invested in the Pegasus Stock Fund at the time of
initial contribution to the Plan, (iii) who in the Plan Year completed 1,000 or
more Hours of Service for the Company, and (iv) who was an Employee of the
Company on the last day of the Plan Year. Notwithstanding the preceding clauses
(iii) and (iv), a Participant or his Beneficiary, as the case may be, shall be
entitled to a Rollover Matching Contribution on his behalf for the Plan Year in
which the Participant's employment terminates on or after his Normal Retirement
Date, terminates because of death, or terminates by reason of Disability,
regardless of whether the Participant was an Employee of the Company on the last
day of the Plan Year.
(b) Amount and Form of Rollover Matching Contributions
(1) Amount. The Company shall contribute to the Trust
- -- on behalf of each Participant who has made a rollover contribution (as
defined in Section 3.12(b)) and is entitled to a Rollover Matching Contribution
under subsection (a) above -- an amount that, at the time of contribution,
equals 100 percent of the cash amount of such rollover contribution that is,
pursuant to the Participant's election under Section 5.1, invested in the
Pegasus Stock Fund at the time of initial contribution to the Plan. However, the
amount of Rollover Matching Contributions for any Plan Year shall not exceed the
amount allowable as a deduction for computing Puerto Rico income tax under
section 1023(n) of the Code for the Company's taxable year which includes the
last day of such Plan Year. Past rollover contributions that are reapportioned
from another Investment Fund to the Pegasus Stock Fund and current rollover
contributions that are initially invested in an Investment Fund other than the
Pegasus Stock Fund shall not be matched by the Company to any extent. Company
contributions made pursuant to this subsection (b) shall be reduced by
Forfeitures.
(2) Form. Rollover Matching Contributions shall be
made either in the form of Pegasus Stock or in cash and used to purchase Pegasus
Stock, and shall be credited to the Participant's Company Account. If made in
Pegasus Stock, the value of such Pegasus Stock at the time of contribution shall
equal the cash amount of the Participant's rollover contribution that is
described in the first sentence of paragraph (1) above.
(c) Time of Contributions. The Rollover Matching Contributions
for each Plan Year shall be paid to the Trustees no later than the due date
(including extensions of time) for filing the Company's Puerto Rico income tax
return for the Company's taxable year coincident with the Plan Year.
3.10 Return of Contributions to Company. All contributions made hereto
and income derived from assets held hereunder are held in trust for the benefit
of Participants and their Beneficiaries. It shall be impossible at any time for
any part of the corpus or income of the Plan to be used for, or
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diverted to, purposes other than the exclusive benefit of Participants and
their Beneficiaries, except --
(a) If the Puerto Rico Treasury Department initially
determines that the Plan, as applied to any Participating Employer, does not
meet the requirements of a "qualified plan" under section 1165(a) of the Code,
the assets of the Trust Fund attributable to contributions made by that employer
under the Plan shall be returned to that employer within one year of the date of
denial of qualification of the Plan as applied to that employer.
(b) Any contribution made to this Plan by the Company because
of a mistake of fact may be returned to the Company within one year after such
contribution is made.
(c) All contributions made hereto are conditioned on
deductibility by the Company for Puerto Rico income tax purposes and, to the
extent such deduction is disallowed by the Puerto Rico Treasury Department, the
amount disallowed may be returned to the Company within one year after such
disallowance.
3.11 Paid Leave of Absence. If a Participant is on a paid leave of
absence, he may either continue to make Before-Tax Contributions or suspend such
Contributions during his absence.
3.12 Rollover Contributions and Direct Transfers
(a) Crediting of Rollover Contributions. A "rollover
contribution" (as defined in subsection (b) below) may be made by or on behalf
of any Participant, with the approval of the Savings Plan Committee. The Trustee
shall credit the amount of any rollover contribution to the Participant's
Rollover Account, a separate sub-account established by the Trustee in the
Participant's Account, as of the date the rollover contribution is made. A
rollover contribution shall be fully vested on the date of contribution. All
rollover contributions shall be in cash and/or other property acceptable to the
Trustee.
(b) Definition of "Rollover Contribution." The term "rollover
contribution" shall mean (i) the contribution of an "eligible rollover
distribution" (as defined in Section 9.7(b)(1)) to the Trustee by a Participant
on or before the 60th day immediately following the day the contributing
Participant receives the eligible rollover distribution, or (ii) the direct
payment of an eligible rollover distribution from a qualified trust described in
section 1165(a) of the Code to the Trustee.
(c) Direct Transfers Otherwise Prohibited. Except as otherwise
provided in this Section, no direct transfers to the Plan shall be permitted.
3.13 Vesting and Distribution of Rollover Account
(a) A Participant shall be fully vested at all times in his
Rollover Account.
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(b) A Participant's Rollover Account shall be distributed as
otherwise provided under the Plan.
3.14 Profits Required. The Company shall make payment of Before-Tax
Contributions, Company Matching Contributions, Company Additional Contributions,
and Rollover Matching Contributions only insofar as it and its Affiliates have
current or accumulated earnings and profits.
ARTICLE IV
LIMITATIONS ON CONTRIBUTIONS
4.1 Definitions. The following definitions shall apply for purposes of
this Article --
(a) "Actual Deferral Percentage" shall mean the average
(expressed as a percentage) of the Actual Deferral Ratios of the Eligible
Participants in a group. The Actual Deferral Percentage shall be calculated to
the nearest 1/100 of one percent.
(b) "Actual Deferral Ratio" shall mean the ratio (expressed as
a percentage) of the Deferral Amounts on behalf of an Eligible Participant for
the Plan Year to the Eligible Participant's Salary for the Plan Year. An
Eligible Participant's Actual Deferral Ratio shall be calculated to the nearest
1/100 of one percent.
(c) "Deferral Amounts" shall mean the Before-Tax Contributions
made with respect to an Eligible Participant in a Plan Year.
(d) "Determination Year" means the Plan Year for which a
determination of which Employees are Highly Compensated Employees is being made.
(e) "Eligible Participant" shall mean an Employee who has met
the eligibility requirements of Article II and who is eligible to have Before-
Tax Contributions made to the Plan on his behalf for the Plan Year.
(f) "Excess Contributions" shall mean, with respect to any
Plan Year, the excess of --
(1) the aggregate Deferral Amounts of Highly
Compensated Employees for such Plan Year, over
(2) the maximum amount of Before-Tax Contributions
permitted by the Actual Deferral Percentage test under Section 4.2(b)
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of Actual Deferral Ratios, beginning with the highest of such
Ratios).
(g) "Excess Deferrals" shall mean the Before-Tax Contributions
for a calendar year that the Participant allocates to this Plan pursuant to the
claims procedure set forth in Section 4.3(b).
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(h) "Highly Compensated Employee" shall mean an Employee who
is among the higher-paid one-third of all Eligible Participants for the Plan
Year.
(i) "Nonhighly Compensated Employee" shall mean an Employee
who is among the lower-paid two-thirds of all Eligible Participants for the Plan
Year.
4.2 Limitation on Before-Tax Contributions
(a) Maximum Amount of Before-Tax Contributions. The amount of
a Participant's Before-Tax Contributions during any calendar year, when added to
the elective deferrals on behalf of the Participant under all other plans,
contracts or arrangements of the Company or any Affiliate, shall not exceed the
lesser of $7,500 or 10 percent of the Participant's Salary for the calendar
year.
(b) Actual Deferral Percentage Test. The Before-Tax
Contributions of the Eligible Participants shall meet at least one of the
following two tests --
(1) The Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Deferral Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25.
(2) The Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Deferral Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by two, provided
that the Actual Deferral Percentage for Eligible Participants who are Highly
Compensated Employees does not exceed the Actual Deferral Percentage for
Eligible Participants who are Nonhighly Compensated Employees by more than two
percentage points.
(c) Special Rules
(1) For purposes of this Section, the Actual Deferral
Ratio for any Eligible Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible to have elective deferrals allocated to his
account under two or more plans or arrangements described in section 1165(e) of
the Code that are maintained by the Company or an Affiliate shall be determined
as if all such elective deferrals were made under a single plan or arrangement.
(2) In the event that this Plan satisfies the
requirements of section 1165(a)(3) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements of such
section only if aggregated with this Plan, then this Section shall be applied by
determining the Actual Deferral Ratios of Eligible Participants as if all such
plans were a single plan.
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(3) A Before-Tax Contribution shall be taken into
account under subsection (b) above for a Plan Year only if it is allocated to
the Eligible Participant's Account as of a date within that Plan Year. For this
purpose, a Before-Tax Contribution shall be considered allocated as of a date
within the Plan Year if the allocation is not contingent on participation in the
Plan or the performance of services after the date and the Before-Tax
Contribution is actually paid to the Trust Fund no later than 12 months after
the end of the Plan Year to which the Before-Tax Contribution relates.
4.3 Distribution of Excess Deferrals
(a) In General. Notwithstanding any other provision of the
Plan, Excess Deferrals plus any income and minus any loss allocable thereto, to
the extent of the Participant's non-matched Before-Tax Contributions plus any
income and minus any loss allocable thereto, shall be distributed no later than
the close of the current Plan Year to Participants who claim allocable Excess
Deferrals for the preceding Plan Year. To the extent (if any) that a
Participant's Excess Deferrals for a Plan Year exceed the amount of his
non-matched Before-Tax Contributions for such Plan Year, such Participant's
matched Before-Tax Contributions, to the extent of such excess, plus any income
and minus any loss allocable thereto, shall be distributed to such Participant
within the period described above. In the event any matched Before-Tax
Contributions are distributed under this subsection (a), Company Matching
Contributions made with respect to such Before-Tax Contributions shall be
forfeited and used to reduce Company Matching Contributions.
(b) Claims. A Participant's claim shall be in writing; shall
be submitted to the Savings Plan Committee no later than the March 1 immediately
following the taxable year for which the Excess Deferrals were made; shall
specify the Participant's Excess Deferrals for the preceding calendar year
(which shall in no event exceed the Participant's Before-Tax Contributions for
that calendar year); and shall be accompanied by the Participant's written
statement that if the Excess Deferrals are not distributed, they, when added to
amounts deferred under other plans or arrangements for such calendar year,
exceed the limit imposed on the Participant by section 1165(e) of the Code for
the year in which the Deferrals occurred. To the extent any Participant has
Excess Deferrals taking into account only the Excess Deferrals made to this
Plan, he shall be deemed to have submitted the claim described in this
subsection (b).
(c) Determination of Income or Loss. A Participant's Excess
Deferrals shall be adjusted for income or loss to the earlier of the date of
distribution or December 31 of the taxable year for which the Excess Deferrals
were deferred. The income or loss allocable to the Excess Deferrals is the
income or loss allocable to the Participant's Before-Tax Contributions Account
for the taxable year multiplied by a fraction; the numerator of the fraction is
the Participant's Excess Deferrals for the year and the denominator of the
fraction is the Participant's Account balance attributable to Before-Tax
Contributions as of the last day of the taxable year reduced by any gains and
increased by any losses allocable to his Before-Tax Contributions Account during
the taxable year.
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(d) Accounting for Excess Deferrals. Excess Deferrals
distributed under this Section shall be distributed from the Participant's
Before-Tax Contributions Account.
4.4 Distribution of Excess Contributions
(a) In General. Notwithstanding any other provision of the
Plan, Excess Contributions plus any income and minus any loss allocable thereto,
to the extent of the Participant's non-matched Before-Tax Contributions plus any
income and minus any loss allocable thereto, shall be distributed within the
12-month period beginning on the earlier of (i) the last day of the Plan Year
for which such Excess Contributions were made or (ii) the date of the complete
termination of the Plan, to Participants on whose behalf the Excess
Contributions were made for such Plan Year. To the extent (if any) that a
Participant's Excess Contributions for a Plan Year exceed the amount of his
non-matched Before-Tax Contributions for such Plan Year, such Participant's
matched Before-Tax Contributions, to the extent of such excess, plus any income
and minus any loss allocable thereto, shall be distributed to such Participant
within the period described above. In the event any matched Before-Tax
Contributions are distributed under this subsection (a), Company Matching
Contributions made with respect to such Before-Tax Contributions shall be
forfeited and used to reduce Company Matching Contributions.
(b) Determination of Excess Contributions. The amount of
Excess Contributions for a Highly Compensated Employee shall be determined in
the following manner. First, the Actual Deferral Ratio ("ADR") of the Highly
Compensated Employee(s) with the highest ADR shall be reduced to the extent
necessary to satisfy Section 4.2(b) or to cause such ADR to equal the ADR of the
Highly Compensated Employee(s) with the next highest ADR. Second, this process
shall be repeated until Section 4.2(b) is satisfied. The amount of Excess
Contributions for a Highly Compensated Employee equals the total of Before-Tax
Contributions taken into account under Section 4.2(b) minus the product of the
Highly Compensated Employee's reduced ADR as determined in this subsection (b)
and the Highly Compensated Employee's Salary.
(c) Determination of Income or Loss. A Participant's Excess
Contributions shall be adjusted for income or loss to the last day of the Plan
Year for which the Excess Contributions were made. The income or loss allocable
to a Participant's Excess Contributions is the income or loss allocable to the
Participant's Deferral Amounts for the Plan Year multiplied by a fraction; the
numerator of the fraction is the Participant's Excess Contributions for the Plan
Year and the denominator of the fraction is the Participant's Account balance
attributable to Deferral Amounts as of the last day of the Plan Year, reduced by
any gains and increased by any losses allocable to his Account balance
attributable to Deferral Amounts during the Plan Year.
(d) Accounting for Excess Contributions. Excess Contributions
shall be distributed from the Participant's Before-Tax Contributions Account in
proportion to the Participant's Before-Tax Contributions.
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(e) Reduction for Excess Deferrals Distributed. The Excess
Contributions which would otherwise be distributed under this Section shall be
reduced by the amount of Excess Deferrals distributed to the Participant under
Section 4.3 for the calendar year ending with or within the Plan Year.
ARTICLE V
VALUATION AND INVESTMENT OF PARTICIPANTS' ACCOUNTS
5.1 Investment of Account Balance. Each Participant may direct, at the
time he commences participation, that his Account (other than amounts in his
Company Account) be invested in one or any combination of Investment Funds made
available by the Savings Plan Committee pursuant to Section 5.2. A Participant
may change his investment election as of any business day in accordance with
procedures established by the Savings Plan Committee. Such change may be made
applicable (as the Participant shall elect) to those portions of his Account
attributable to past and/or future contributions to the Plan; provided, however,
that past contributions invested in the Pegasus Stock Fund may not thereafter be
reapportioned to any other Investment Fund.
Notwithstanding the foregoing, the Savings Plan Committee may,
in connection with any modification of the Investment Funds offered under the
Plan, provide, on a transitional basis or otherwise, different rules for the
administration of the Investment Fund elections of Participants.
5.2 Investment Funds
(a) The Funds. The Trustees shall maintain, within the Trust,
the Investment Funds designated by the Savings Plan Committee from time to time,
as set forth in Appendix A hereto, for the investment of Plan assets. However,
the Savings Plan Committee may, in its discretion, discontinue any of the
Investment Funds listed in Appendix A and/or create additional Investment Funds.
(b) Provisions Concerning the Pegasus Stock Fund
(1) Eligible Individual Account Plan. With respect
to investments in the Pegasus Stock Fund, it is intended that this Plan shall be
an eligible individual account plan within the meaning of section 407(d)(3) of
ERISA, and that up to 100 percent of the assets of the Plan may be invested in
Pegasus Stock in accordance with the provisions of the Plan.
(2) Acquisition of Pegasus Stock by the Trustees.
The Company may contribute shares of Pegasus Stock as Company Matching
Contributions, Company Additional Contributions, and/or Rollover Matching
Contributions to the Plan pursuant to Section 3.2(b), Section 3.7(c), and/or
Section 3.9(b), respectively, or, pursuant to directions from the Savings Plan
Committee, the Trustees may purchase shares of Pegasus Stock using funds held by
the Trustees under the Plan or contributed to the Plan by the Company. Shares of
Pegasus Stock may be purchased from the Company and/or from an Affiliate and/or
from a shareholder and/or on the open market (at such time as the shares are
readily tradeable on an established market). Shares of Pegasus Stock sold to the
Trustees by the Company or an Affiliate or delivered by the
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Company as a Plan contribution may be out of authorized and unissued shares. The
Trustees may also hold, for the purpose of allocation to the Accounts of
Participants, shares of Pegasus Stock that are forfeited under the terms of the
Plan.
(3) Valuation of Pegasus Stock. Transactions between
the Trustees and the Company or the Trustees and any other purchaser or seller
of Pegasus Stock shall be based on the then current fair market value of such
Pegasus Stock. For purposes of determining such value, fair market value shall
mean the closing price of Pegasus Stock on a registered securities exchange or
on an over-the-counter market on the last business day on which Pegasus Stock
traded prior to the date of the transaction.
(4) Distributions from Pegasus Stock Fund. If a
Participant becomes entitled to a distribution of amounts invested in the
Pegasus Stock Fund, such distribution shall be made in Pegasus Stock; provided,
however, that the value of any fractional shares held in the Pegasus Stock Fund
on the Participant's behalf shall be paid to the Participant in cash.
(5) Voting of Pegasus Stock. The Trustees shall be
entitled to vote all shares of Pegasus Stock held in any Participant's
Account.
5.3 Reinvestment. Income and realized capital gains on the portion of a
Participant's Account invested in an Investment Fund shall be reinvested in the
same Fund.
5.4 Investment Fund Designations. Company Matching Contributions,
Company Additional Contributions, and Rollover Matching Contributions shall be
invested in the Pegasus Stock Fund. All other contributions shall be invested in
whichever Investment Fund(s) the Participant designates, either --
(a) 100 percent in one Fund; or
(b) in two or more Funds on the basis of a distribution of
contributions between them in multiples of 10 percent.
To the extent a Participant does not specify how the contributions made on his
behalf are to be invested, they shall be invested in the Government Securities
Trust Money Market Series fund.
5.5 Valuation of Investment Funds. The Trustees shall determine and
advise the Savings Plan Committee of the fair market value of each Investment
Fund as of the end of each calendar quarter.
5.6 Valuation of Participant's Account in Investment Funds. The value
of each Participant's Account shall be determined by the Trustees as of each
Valuation Date.
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ARTICLE VI
ELIGIBILITY FOR BENEFITS
6.1 Normal Retirement Benefits. A Participant who retires from the
employ of the Company on his Normal Retirement Date shall receive payment of his
Account as promptly as practicable after the first Valuation Date following his
retirement, valued pursuant to Section 9.3.
6.2 Postponed Retirement Benefits. A Participant shall be permitted to
continue in employment beyond his Normal Retirement Date, in which case he shall
continue in all respects as a Participant until his Postponed Retirement Date.
Such Participant shall receive payment of his Account as promptly as practicable
after the first Valuation Date following his retirement, valued pursuant to
Section 9.3.
6.3 Termination Benefits
(a) Termination of Employment. A Participant whose employment
is terminated (voluntarily or involuntarily), and to whom Sections 6.1 and 6.2
are not applicable, shall receive payment of the vested portion of his Company
Account, and his Before-Tax and Rollover Accounts, valued pursuant to Section
9.3. Subject to the Participant's consent, if required by Section 9.6, benefits
shall be paid as promptly as practicable after the first Valuation Date
following his termination of employment.
(b) Later Vesting. A Participant who receives a distribution
under this Section or who makes a withdrawal from his Company Account under
Article X, and who has a balance remaining in his Company Account in which his
Vested Interest can increase, shall have his Vested Interest in his Company
Account determined as follows --
X = P (AB + D) - D,
where P is the vested percentage at the relevant time, AB is the balance in his
Company Account at the relevant time, and D is the amount of the prior
distribution or withdrawal.
(c) Sale of Assets or Subsidiary. The following events shall
constitute a separation from service for purposes of this Section --
(1) the sale or other disposition by the Company to
an unrelated entity of substantially all of the assets (within the meaning of
section 1165(e)(2)(B)(iii) of the Code) used by the Company in a trade or
business of the Company with respect to a Participant who continues employment
with the entity acquiring the assets;
(2) the sale or other disposition by the Company to
an unrelated entity of the Company's interest in a subsidiary (within the
meaning of section 1165(e)(2)(B)(iv) of the Code) with respect to a Participant
who continues employment with the subsidiary.
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However, an event shall not be treated as described in the preceding sentence
with respect to a Participant unless (i) the Participant receives a lump-sum
distribution by reason of the event, (ii) the Company continues to maintain the
Plan after the sale or other disposition, and the purchaser does not so maintain
the Plan after the sale or other disposition, and (iii) the distribution is made
in connection with the disposition of assets or a subsidiary.
6.4 Reemployment
(a) Forfeiture Upon Distribution. If a Participant who is less
than 100 percent vested in his Company Account receives a single-sum
distribution of his entire Vested Interest under Section 6.3 upon termination of
his employment, the non-vested portion of his Company Account (the "restricted
benefit") shall be a Forfeiture and shall be treated as provided in Section 8.3.
A Participant who is not entitled to any benefit under the Plan shall be deemed,
upon his termination of employment, to have received a cash-out of $0.00 from
the Plan. If the Participant is thereafter reemployed by the Company and makes
the repayment described in subsection (c) below, an amount equal to the
Participant's restricted benefit shall be contributed to the Plan by the Company
and re-credited to the Participant's Company Account, as described in subsection
(c) below.
(b) Vesting Upon Reemployment. If a Participant is reemployed
before incurring five or more consecutive Breaks in Service, his Years of
Vesting Service before his Reemployment Date plus his Years of Vesting Service
after his Reemployment Date shall be counted to determine his Vested Interest in
the amount credited to his Company Account after his Reemployment Date. If the
Participant is reemployed after incurring five or more consecutive Breaks in
Service, Years of Vesting Service after such Breaks shall not be taken into
account in determining his Vested Interest in the amount in his Company Account
prior to such Breaks. If, as a result, the Participant has different vested
percentages in amounts attributable to his pre-Break and post-Break Company
Account, the Savings Plan Committee shall maintain within his Company Account
separate subaccounts for such pre-Break and post-Break amounts.
(c) Repayment By Participant. If a Participant receives a
single-sum distribution and incurs a Forfeiture as described in subsection (a)
above, and thereafter resumes employment covered under the Plan, the Participant
may repay to the Plan the full amount of the distribution before the earlier of
(i) five years after the Participant's Reemployment Date, or (ii) the date on
which the Participant incurs the last of five consecutive Breaks in Service
following the date of distribution. If the Participant makes such a repayment,
an amount equal to the Participant's restricted benefit shall be restored to the
Participant's Company Account.
(d) Restoration of Restricted Benefit. Any restricted benefit
restored under subsection (c) above shall thereafter be subject to the vesting
provisions of Section 8.2. The sources for restoring a restricted benefit shall
be, in order of priority --
(1) Forfeitures occurring in the Plan Year of
restoration; and, if not sufficient,
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(2) additional Company contributions.
ARTICLE VII
DEATH BENEFITS
7.1 Designation of Beneficiary and Form of Payment of Death Benefit. If
a Participant has a Surviving Spouse at his death, the Spouse shall be the
Participant's Beneficiary, unless the Spouse has consented in the manner
described in Section 7.2 to the payment of the Participant's Account to a
Beneficiary other than the Spouse. If the Participant has no surviving Spouse at
his death, the Beneficiary shall be the Beneficiary designated by the
Participant. Any designation by the Participant and/or consent by the
Participant's Spouse shall be made by a written form delivered to the Savings
Plan Committee. Except as otherwise provided with respect to a surviving Spouse,
a Participant may, at any time prior to his death, change his Beneficiary
designation by completing a new written form, but a Beneficiary designation
shall remain in effect until such new form is received by the Savings Plan
Committee.
7.2 Requirements for Spouse's Consent
(a) To be effective, a consent by a Spouse to a Participant's
designation of a non-Spouse Beneficiary must be made in a writing filed with the
Savings Plan Committee, shall be specific with respect to the particular
non-Spouse Beneficiary (including any class of Beneficiaries or contingent
Beneficiaries) consented to, must be irrevocable, and must be witnessed by a
notary public or by a Plan representative designated by the Savings Plan
Committee. The specific Beneficiary(ies) and benefit form designated may not be
changed without the consent of the Spouse unless the Spouse expressly permits
subsequent designations by the Participant without any further consent by the
Spouse. A consent that permits subsequent designations by the Participant
without any further consent by the Spouse must acknowledge that the Spouse has
the right to limit consent to a specific Beneficiary and to a specific benefit
form and that the Spouse voluntarily elects to relinquish such rights.
(b) Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of the Plan representative that such
written consent cannot be obtained because there is no Spouse or because the
Participant's Spouse cannot be located, the Participant's designation of a
non-Spouse Beneficiary shall be deemed a permissible election. If the Spouse is
legally incompetent to give consent, the Spouse's legal guardian may give
consent, even if such guardian is the Participant. Also, if the Participant is
legally separated or has been abandoned (within the meaning of local law) and
the Participant has a court order to such effect, spousal consent is not
required unless a qualified domestic relations order (as defined in section
206(d) of ERISA) provides otherwise.
(c) Any consent required under this Section shall be valid
only with respect to the Spouse who signs the consent; or, in the event of a
deemed permissible election, the designated Spouse (if any). Additionally, a
Participant may revoke a prior Beneficiary designation without the consent of
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his Spouse at any time before the commencement of benefits. The number of
revocations or consents shall not be limited. Any new designation or change of
Beneficiary shall require a new spousal consent.
7.3 Payment of Benefits. Upon the death of any Participant, his
Beneficiary shall receive payment of his Account as promptly as practicable
after the first Valuation Date following the Participant's death.
ARTICLE VIII
VESTING
8.1 Vested Interest in Before-Tax Contributions Account. A
Participant's Vested Interest in his Before-Tax Contributions Account shall be
100 percent at all times.
8.2 Vested Interest in Company Account
(a) A Participant's Vested Interest in his Company Account
shall be 100 percent when the Participant --
(1) attains Normal Retirement Age;
(2) incurs a Disability; or
(3) dies.
(b) Except as otherwise provided in subsection (a) above, a
Participant's Vested Interest in his Company Account shall be determined in
accordance with the following schedule --
Vested
Years of Vesting Service Percentage
Fewer than 2 0
2 but fewer than 3 34
3 but fewer than 4 67
4 or more 100
8.3 Forfeitures. All Forfeitures which arise hereunder shall be applied
as soon as possible to restore restricted benefits as provided in Section 6.4(d)
and, to the extent any Forfeitures remain, Forfeitures of Company Matching
Contributions shall be used to reduce subsequent Company Matching Contributions,
Forfeitures of Company Additional Contributions shall be used to reduce
subsequent Company Additional Contributions, and Forfeitures of Rollover
Matching Contributions shall be used to reduce subsequent Company Matching
Contributions, Company Additional Contributions, and/or Rollover Matching
Contributions.
8.4 No Divestment for Cause. There shall be no divestment of a
Participant's Vested Interest for any cause.
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ARTICLE IX
PAYMENT OF BENEFITS
9.1 Method of Payment. Any distribution under the Plan shall be paid
(in either cash or Pegasus Stock, as provided in Section 9.2) in a single sum
from the Trust Fund. If the value of the Participant's Vested Interest does not
exceed (and did not at the time of any prior distribution exceed) $3,500, the
Participant's Vested Interest shall be paid to him in the form of an involuntary
single-sum payment from the Trust Fund. If the value of the Participant's Vested
Interest exceeds (or at the time of any prior distribution exceeded) $3,500, the
Participant must consent in writing, pursuant to Section 9.6, to any
distribution from his Account before his Normal Retirement Age.
9.2 Form of Payment. Except as provided in Section 5.2(b)(4), regarding
distributions from the Pegasus Stock Fund, payment of benefits under the Plan
shall be made in cash or its equivalent.
9.3 Valuation of Accounts. The distribution value of each Investment
Fund in which the Participant has elected to invest his Account shall equal such
Fund's share price as of the actual liquidation date multiplied by the
Participant's portion of such Fund's share balance. The share balance of the
portion of the Participant's Account invested in any Investment Fund shall equal
the number of shares of such Fund credited to the Participant's Account as of
the Valuation Date immediately preceding the benefit commencement date.
9.4 Entitlement to Benefits. A Participant shall not be entitled to any
benefits until his right has been determined by the Savings Plan Committee
pursuant to the terms of the Plan and until he has given to the Savings Plan
Committee, in proper form, the necessary data it asks for (such as proof of the
birth date of the Participant and his Beneficiary).
9.5 Requirements Concerning Distributions. All benefit distributions
under this Article shall be subject to the following requirements --
(a) Before Death
(1) Last Date for Commencement of Benefit Payments.
The payment of benefits to a Participant under this Plan shall commence not
later than the 60th day after the close of the Plan Year in which the latest of
the following events occurs --
(A) the Participant attains his Normal
Retirement Age;
(B) the tenth anniversary of the year the
Participant commenced participation in the Plan; or
(C) the termination of the Participant's
service with all Affiliates.
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Notwithstanding the above, if the amount of
payment required otherwise to commence on a date determined under this Section
or under any other Section of the Plan cannot be ascertained by such date, or if
the Savings Plan Committee is unable to locate the Participant or Beneficiary
after making reasonable efforts to do so, a payment retroactive to such date may
be made no later than 60 days after the later of (i) the earliest date on which
the amount of such payment can be ascertained under the Plan or (ii) the
earliest date on which the Participant or Beneficiary is located.
(2) Additional Rule for Commencement of Benefit
Payments. The distribution of benefits to each Participant who is entitled to a
benefit under the Plan shall be made not later than the Participant's "Required
Beginning Date" (as defined in subsection (c) below).
(b) After Death
(1) Five-Year Rule. If a Participant dies before his
Required Beginning Date, and if any portion of the Participant's interest is
payable to (or for the benefit of) his designated Beneficiary, distribution
shall be made not later than the latest of --
(A) December 31 of the year after the year
of the Participant's death;
(B) such later date as regulations of the
Secretary of the Treasury may prescribe; or
(C) if the Participant's designated
Beneficiary is his surviving Spouse, December 31 of the year in which the
Participant would have attained age 70 1/2.
In any other case, the entire benefit of the
Participant shall be distributed by December 31 of the year containing the fifth
anniversary of the date of his death.
(2) Special Rule for Surviving Spouse. For purposes
of paragraph (1) above, if the Participant's designated Beneficiary is his
surviving Spouse and if such surviving Spouse dies before distribution is made,
then this subsection (b) shall be applied as if such surviving Spouse were the
Participant.
(c) "Required Beginning Date" shall mean April 1 of the
calendar year following the calendar year in which a Participant attains age 70
1/2.
9.6 Participant's Consent to Distribution of Benefits
(a) Except as provided in subsections (b) and (c) below, the
Savings Plan Committee shall provide each Participant, not more than 90 days and
not fewer than 30 days prior to the date his Vested Interest is distributed to
him, written notice of his right to defer receipt of the distribution until his
Normal Retirement Age. Distribution shall not be made prior to the Participant's
Normal Retirement Age unless the Participant
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affirmatively elects a distribution in writing on a form filed with the Savings
Plan Committee.
(b) The written notice described in subsection (a) above shall
not apply to the distribution if (i) the Participant receives an involuntary
single-sum payment under Section 9.1, or (ii) the distribution is made on or
after the Participant's Normal Retirement Age.
(c) A distribution may be made or may commence fewer than 30
days after the notice described in subsection (a) above is given to the
Participant, provided --
(i) the Savings Plan Committee clearly informs the
Participant that he has a right to a period of at least 30 days after receiving
the notice to consider whether or not to elect the distribution (or, if
applicable, a particular distribution option); and
(ii) the Participant, after receiving the notice,
affirmatively elects the distribution.
9.7 Direct Rollovers of Eligible Rollover Distributions Made From This
Plan
(a) Direct Rollovers. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a distributee's election under
this Section, a distributee may elect, at the time and in the manner prescribed
by the Savings Plan Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(b) Definitions.
(1) "Eligible rollover distribution" -- Any
distribution of all of the balance to the credit of the distributee.
(2) "Eligible retirement plan" -- An individual
retirement account described in Section 1169(a) of the Code, an individual
retirement annuity described in section 1169(b) of the Code, or a qualified
trust described in section 1165(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible rollover
distribution to the Surviving Spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
(3) "Distributee" -- An Employee or former Employee.
In addition, the Employee's or former Employee's Surviving Spouse and the
Employee's or former Employee's Spouse or former spouse who is the alternate
payee under a qualified domestic relations order are distributees with regard to
the interest of the Spouse or former spouse.
(4) "Direct rollover" -- A payment by the Plan to the
eligible retirement plan specified by the distributee.
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ARTICLE X
WITHDRAWALS
10.1 General Rules for All Withdrawals
(a) Amount and Valuation. Subject to Section 10.3, which
prohibits a Participant who has not attained age 59 1/2 from withdrawing any
amount from his Account except from his Before-Tax Contributions Account and
then only for reasons of financial hardship, a Participant may withdraw, as of
any Valuation Date, an amount from that portion of his Account not invested in
the Pegasus Stock Fund upon written application to the Savings Plan Committee
made at least 15 days before the date on which the Participant wishes the
withdrawal to occur. The minimum withdrawal is the lesser of $1,000 or 100
percent of the value of the Participant's Vested Interest. The value of the
Participant's Vested Interest and the value of the withdrawal shall be
determined under Section 9.3.
(b) From Accounts. Withdrawals from a Participant's Account
(other than from that portion invested in the Pegasus Stock Fund) shall be made
in the following order --
(1) first, from the Participant's Rollover Account;
and
(2) last, from the Participant's Before-Tax
Contributions Account.
No amounts may be withdrawn form the Pegasus Stock Fund under this Article.
(c) From Investment Funds. To the extent that any withdrawal
is made from a particular Account of a Participant, such withdrawal shall be
made pro-rata from the investments of such Account in the Investment Funds other
than the Pegasus Stock Fund.
10.2 Withdrawals On or After Attainment of Age 59 1/2. A Participant
who has attained age 59 1/2 may withdraw amounts from any of his Accounts for
any reason.
10.3 Hardship Withdrawals of Before-Tax Contributions. A Participant
who has not attained age 59 1/2 may only withdraw an amount from his Before-Tax
Contributions Account, as a withdrawal for extreme economic emergency
(hardship), subject to the following rules --
(a) A hardship withdrawal is permitted only if the hardship
consists of (i) an immediate and heavy financial need of the Participant and
(ii) the withdrawal requested is necessary to satisfy the financial need
(including any amounts necessary to pay any Federal, Commonwealth, or local
income taxes or penalties reasonably anticipated to result from the withdrawal).
Hardship withdrawals may not include earnings on the Participant's Before-Tax
Contributions.
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(b) An immediate and heavy financial need consists only of the
following (plus the associated taxes and penalties described in subsection (a)
above) --
(1) expenses for medical care previously incurred by
the Participant, the Participant's Spouse, or any dependents of the Participant,
or necessary for those persons to obtain medical care;
(2) costs directly related to the purchase of a
principal residence for the Participant (excluding mortgage payments);
(3) the payment of tuition, related educational fees,
and room and board expenses for the next 12 months of post-secondary education
for the Participant, the Participant's Spouse, children, or dependents;
(4) payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure on the mortgage on the
Participant's principal residence; or
(5) any other event deemed an immediate and heavy
financial need by the Secretary of the Puerto Rico Treasury Department.
(c) A distribution is necessary to satisfy the financial need
if the Savings Plan Committee reasonably relies upon the Participant's
representation that the distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant and the financial need
cannot be relieved --
(1) through reimbursement or compensation by
insurance or otherwise;
(2) by reasonable liquidation of the Participant's
assets, including assets of the Participant's Spouse and minor children that are
reasonably available to the Participant, to the extent such liquidation would
not itself cause an immediate and heavy financial need;
(3) by cessation of Before-Tax Contributions under
the Plan; or
(4) by other distributions or nontaxable (at the time
of the loan) loans from the Plan or from other plans maintained by the Company
or by any other employer, or by borrowing from commercial sources on reasonable
commercial terms.
(d) The withdrawal shall be based on the balance in the
Participant's Before-Tax Contributions Account determined under Section 10.4.
(e) A Participant's request for a hardship withdrawal must be
approved by the Savings Plan Committee as meeting the hardship distribution
rules under section 1165(e) of the Code and regulations issued thereunder at the
time of withdrawal.
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(f) A Participant may continue to make Before-Tax
Contributions and continue to receive allocations of Company Matching
Contributions after a hardship withdrawal.
ARTICLE XI
LOANS
11.1 In General. A Participant employed by the Company and receiving a
Salary as of the loan date (and a terminated Participant, or a Beneficiary, who
is a party in interest to the Plan under section 3(14) of ERISA) may apply in
writing to the Savings Plan Committee for a loan from his Account. For purposes
of this Section, the term "Participant" shall include any terminated Participant
or Beneficiary to whom Plan loans are available, except where the context
otherwise requires.
11.2 Amount. The minimum amount of any loan for which a Participant may
apply under this Article shall be $1,000. The maximum amount of any loan shall
equal the lesser of --
(a) $50,000 (reduced by the highest outstanding balance of
loans to the borrower from the Plan during the one-year period ending on the day
before the date the loan is made); or
(b) the lesser of 1/2 of the amount of the borrower's Vested
Interest, or the amount of the borrower's Vested Interest invested in
Investment Funds other than the Pegasus Stock Fund.
An assignment or pledge of any portion of the borrower's interest in the Plan
shall be treated as a loan under this Section.
11.3 Valuation. For purposes of this Article, in determining the amount
of a Participant's Vested Interest, his Account shall be valued pursuant to
Section 9.3 as of the last day of the month preceding the month in which the
loan is made.
11.4 Repayment. All loans shall be repayable by their terms within five
years, except for a loan used to acquire a dwelling unit which within a
reasonable time is to be used as the principal residence of the Participant
requesting the loan, which shall be repayable in 15 years. The determination of
whether a dwelling unit is to be used within a reasonable time as the principal
residence shall be made at the time the loan is made. Loans shall be repaid with
substantially level payments made not less frequently than quarterly over the
term of the loan. Loans to active Participants shall be repaid by payroll
deduction from the wages of the Participant, and loans to terminated
Participants (and Beneficiaries) shall be repaid by direct installment payments
from the borrower to the Trustee, according to an amortization schedule
established by the Savings Plan Committee in a nondiscriminatory manner,
commencing with the month following the month in which the loan is made. The
Participant shall have the right to prepay all or any portion of the outstanding
principal balance of the loan without penalty at the end of any calendar
quarter, provided that the amount of any such
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prepayment shall not be less than the lesser of the outstanding principal
balance of the loan or $1,000.
11.5 Security. Any loan to a Participant under the Plan shall be
secured by the pledge of all of the Participant's right, title, and interest in
his Accrued Benefit; provided that immediately after the granting or renewing of
the loan, not more than 50 percent of the Vested Interest of the Participant
shall be used as security for the outstanding balance of the loan. The pledge
shall be evidenced by the execution of a promissory note by the Participant
providing that, in the event of any default by the Participant on a loan
repayment, the Savings Plan Committee shall be authorized (to the extent
permitted by law) to deduct the amount of the loan outstanding and any unpaid
interest due thereon from the Participant's wages or salary to be thereafter
paid by the Company (in the case of an active Participant), to enforce the
Plan's security interest in the Participant's Accrued Benefit, and to take any
and all other actions necessary and appropriate to enforce the collection of the
unpaid loan.
11.6 Distribution of Benefits. A Participant shall not be entitled to
any distribution of benefits under Article IX or withdrawal under Article X from
the amounts credited to his Account that have been used to secure a loan to him
under this Article unless and until the loan has been completely repaid.
11.7 Default
(a) Failure to Make Payment. A default shall occur if the
Participant fails to make any payment due under the terms of the loan in a
timely manner. In the event of a default by a Participant on a loan repayment,
all remaining payments of the loan shall be immediately due and payable. In the
case of any active Participant who is not entitled to a distribution under
Article IX or a withdrawal under Article X, the Savings Plan Committee shall, to
the extent permitted by law, deduct the total amount of the loan outstanding and
any unpaid interest due thereon from the wages or salaries payable to the
Participant by the Company in accordance with the Participant's promissory note.
In the case of any Participant who is entitled to a distribution under Article
IX or a withdrawal under Article X at the time of the default, the Trustee shall
deduct the total amount of the loan outstanding and any unpaid interest due
thereon from the Participant's Account in order to satisfy the amount due. In
the case of a borrower who is not entitled to a distribution or withdrawal at
the time of the default, the Trustee may delay enforcement of the Plan's
security interest in the borrower's Account. In addition, the Savings Plan
Committee shall take any and all other actions necessary and appropriate to
enforce the collection of the unpaid loan. For any Participant who defaults on a
loan repayment, no further contributions shall be made by or on behalf of the
Participant to the Trust Fund until the first payroll period commencing at least
12 complete calendar months following the correction of the Participant's
default.
(b) Separation from Service. If the Participant ceases to be
actively employed and receiving a Salary before the loan is repaid, as, for
example, in the event of a leave of absence or disability leave, the Savings
Plan Committee may permit the Participant to continue to make loan repayments
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or may, in the Savings Plan Committee's discretion, accelerate the loan. If the
Participant separates from service, and if, following such separation, the
Participant is no longer a party in interest to the Plan, the loan shall be
accelerated, and the unpaid balance of the loan, and accrued interest thereon,
shall be deducted from the amount of any benefits which become payable to or on
behalf of the Participant under the Plan.
11.8 Interest. Each loan shall bear a rate of interest which is two
percentage points greater than the prime lending rate on the first business day
of the week in which the loan application is filed, as announced in The Wall
Street Journal, or such other rate of interest as is determined necessary by the
Savings Plan Committee to ensure that the rate of interest is commensurate with
the prevailing interest rate in effect for comparable loans at one or more banks
in the community. The interest rate and other terms of the loan shall be fixed
at the time the loan is made.
11.9 Administration
(a) All loans shall be effected by documents approved in form
by the Savings Plan Committee.
(b) All loans shall (i) be available to all eligible
Participants on a reasonably equivalent basis; (ii) not be made available to
eligible Participants who are Highly Compensated Employees (within the meaning
of Section 4.1) in an amount greater than the amount made available to other
eligible Participants; and (iii) be made in accordance with this Article.
(c) A Participant shall not be permitted to have more than one
loan from the Plan outstanding at any time.
11.10 Earmarking. Until a loan to a Participant is repaid, the
outstanding balance of the loan shall be treated as an investment by the
Participant for his Account only, and the interest paid by the Participant shall
be credited to his Account only. The Account shall not share in any other
earnings of the Plan with respect to the amount of the loan.
ARTICLE XII
ALLOCATION OF FIDUCIARY RESPONSIBILITY
12.1 Allocation. Authority and responsibility for management of the
Plan and Trust Fund shall be allocated among the following persons --
(a) The Board of Directors shall have sole responsibility for
the appointment, removal and replacement of the members of the Savings Plan
Committee described in Article XIII and the Trustees described in Article XIV.
To the extent that they are carrying out these responsibilities, the members of
the Board of Directors shall be "named fiduciaries" of the Plan for purposes of
section 402(a)(1) of ERISA.
(b) The Savings Plan Committee shall have sole responsibility
for the administration of the Plan. The members of the Savings Plan Committee
shall be "named fiduciaries" of the Plan.
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(c) Subject to the investment direction of the Participant
pursuant to Section 5.1, the Trustees shall have sole responsibility for the
management and control of the Trust Fund. The Trustees shall be "named
fiduciaries" of the Plan.
12.2 Exclusive Responsibility. It is the purpose of this Plan and the
Trust Agreement to allocate to each of the fiduciaries identified in Section
12.1 exclusive responsibility for prudent execution of the functions assigned to
him and no responsibility for execution of functions assigned to others.
Whenever one such fiduciary is required by the Plan or the Trust Agreement to
follow the directions of another such fiduciary, the two fiduciaries shall not
be deemed to have been assigned a shared responsibility, but the fiduciary
giving the directions shall have sole responsibility for the functions assigned
to him, including issuing such directions, and the fiduciary receiving the
directions shall have sole responsibility for the functions assigned to him,
including following such directions insofar as they are on their face proper
under this Plan and the Trust Agreement and under applicable law.
12.3 Co-Fiduciary Liability. A fiduciary shall not be liable for a
breach of fiduciary responsibility by another fiduciary to whom other fiduciary
responsibilities have been assigned under the Plan except under the following
circumstances --
(a) if he participates knowingly in, or knowingly undertakes
to conceal, an act or omission of such other fiduciary, knowing such act or
omission is a breach;
(b) if, by his failure properly to discharge his own fiduciary
responsibilities, he has enabled such other fiduciary to commit a breach; or
(c) if he has knowledge of a breach by such other fiduciary,
unless he makes reasonable efforts under the circumstances to remedy the breach.
12.4 Interest of Participants. In carrying out the responsibilities
allocated to him under this Plan and the Trust Agreement, each fiduciary shall
act solely in the interest of the Participants and their beneficiaries.
12.5 Employment of Advisers. A fiduciary identified in Section 12.1 may
employ one or more persons to render advice with regard to such fiduciary's
responsibilities under the Plan.
12.6 Standards of Fiduciary Conduct. Each fiduciary described in this
Article shall act solely in the interest of the Participants and beneficiaries
and --
(a) for the exclusive purpose of providing benefits to
Participants and their beneficiaries and defraying reasonable expenses of
administering the Plan;
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(b) with the care, skill, prudence and diligence that a
prudent man acting in a like capacity and familiar with such matters would use
under the circumstances;
(c) by diversifying the investments of the Trust Fund so as to
minimize the risk of large losses, unless under the circumstances it is clearly
prudent not to do so; and
(d) in accordance with the terms of the Plan and Trust
Agreement and the provisions of ERISA.
12.7 Limitation on Fiduciary Liability. No fiduciary, including (but
not limited to) the Committee and the Trustee, shall be liable for any loss or
by reason of any breach resulting from the Participant's exercise of investment
control as provided in Section 5.1. It is intended that this Plan shall
constitute a plan described in section 404(c) of ERISA and 29 C.F.R. ss.
2550.404c-1 with respect to all Investment Funds other than the Pegasus Stock
Fund.
ARTICLE XIII
ADMINISTRATION
13.1 Savings Plan Committee. The Board of Directors shall appoint a
Savings Plan Committee of at least three persons to administer the Plan. Members
of the Savings Plan Committee shall serve at the pleasure of the Board of
Directors. Vacancies on the Savings Plan Committee shall be filled by the Board
of Directors. Any Savings Plan Committee member may resign by delivering his
written resignation to the Board of Directors, and the resignation shall become
effective at delivery or at any later date specified therein. The Board of
Directors shall notify the Trustee of the appointment of the Savings Plan
Committee and of subsequent changes in its membership.
13.2 Quorum. The Savings Plan Committee shall act by a majority vote. A
quorum to do business shall be at least half of those who are then members.
13.3 Administrative Rules. Subject to the terms of this Plan, the
Savings Plan Committee may, in its discretion, set and change its rules for
transacting business and administering the Plan.
13.4 Authority and Administrative and Professional Assistance. The
Savings Plan Committee members shall elect a Chairman, who must be a Savings
Plan Committee member, and a Secretary, who need not be. The Savings Plan
Committee members may --
(a) appoint, from their members, such committees with such
powers as they shall determine;
(b) authorize agents and/or appoint representatives to execute
or deliver instruments on their behalf or to do any other acts necessary and
proper to the administration of the Plan; and
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(c) employ counsel, agents, and purveyors of clerical,
medical, actuarial, and other expert services which the Savings Plan Committee
deems necessary or appropriate to its administration of the Plan.
In addition to the foregoing powers and duties, the Savings Plan Committee shall
have the duty to establish reasonable procedures for determining the qualified
status of domestic relations orders which relate to the Plan, as provided in
section 206(d) of ERISA.
13.5 Decision of Savings Plan Committee. The Savings Plan Committee
shall have sole discretion to carry out its responsibilities under this Article
of determining eligibility for benefits under the Plan and of construing the
terms of the Plan (including disputed or doubtful terms). To the maximum extent
permissible under law, the Savings Plan Committee's determinations on all such
matters shall be final and binding on all persons involved.
13.6 Accounting. The Savings Plan Committee shall provide for keeping
such accounts as it deems necessary and proper.
13.7 Claims Procedure. The procedure for presenting claims under the
Plan and appealing denials thereof shall be as follows, subject, however, to
such modifications consistent with ERISA as the Savings Plan Committee may deem
necessary or desirable in the circumstances --
(a) Filing of Claims. Any Participant, surviving Spouse, or
Beneficiary (the "claimant") may file a written claim for a Plan benefit with
the Savings Plan Committee or with a person named by the Savings Plan Committee
to receive claims under the Plan.
(b) Notice of Denial of Claim. In the event of a denial or
limitation of any benefit or payment due to or requested by any claimant, the
claimant shall be given a written notification containing specific reasons for
the denial or limitation of his benefit. The written notification shall contain
specific reference to the pertinent Plan provisions on which the denial or
limitation of benefits is based. In addition, it shall contain a description of
any additional material or information necessary for the claimant to perfect a
claim and an explanation of why such material or information is necessary.
Further, the notification shall provide appropriate information as to the steps
to be taken if the claimant wishes to submit his claim for review.
This written notification shall be given to the claimant
within 90 days after receipt of his claim by the Savings Plan Committee unless
special circumstances require an extension of time for processing, in which case
written notice of the extension shall be furnished to the claimant prior to the
termination of the original 90-day period, and the notice shall indicate the
special circumstances which make the postponement appropriate. In no event may
the extension exceed a total of 180 days from the date of the original receipt
of the claim.
(c) Right of Review. In the event of a denial or limitation of
benefits, the claimant or his duly authorized representative shall be
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permitted to review the pertinent documents and to submit to the Savings Plan
Committee issues and comments in writing. In addition, the claimant or his duly
authorized representative may make a written request for a full and fair review
of his claim and its denial or limitation by the Savings Plan Committee. Such
written request must be received by the Savings Plan Committee (or its delegate)
within 60 days after receipt by the claimant of written notification of the
denial or limitation of the claim. The 60-day requirement may be waived by the
Savings Plan Committee in appropriate cases.
(d) Decision on Review
(1) A decision shall be rendered by the Savings Plan
Committee within 60 days after the receipt of the request for review. However,
where special circumstances make a longer period for decision necessary or
appropriate, the Savings Plan Committee's decision may be postponed on written
notice to the claimant (prior to the expiration of the initial 60-day period)
for an additional 60 days. In no event shall the Savings Plan Committee's
decision be rendered more than 120 days after the receipt of such request for
review.
(2) Any decision by the Savings Plan Committee shall
be furnished to the claimant in writing in a manner calculated to be understood
by the claimant and shall set forth the specific reason(s) for the decision and
the specific Plan provision(s) on which the decision is based.
(e) Deemed Denial. If a decision is not rendered within the
time period prescribed in subsection (b) or (d) above, such claim shall be
deemed denied.
(f) Regulations. It is intended that the claims procedure of
this Plan be administered in accordance with the claims procedure regulations of
the Department of Labor set forth in 29 C.F.R. ss. 2560.503.1.
13.8 Compensation. Savings Plan Committee members shall serve without
compensation, but the Company shall pay or reimburse them for reasonable
expenses incurred in performing their duties. The Savings Plan Committee shall
have the right to purchase such insurance as it deems necessary to protect the
Plan and the Trust Fund from loss due to any breach of fiduciary responsibility
by any person. Any premiums due on such insurance shall be paid from the Trust
Fund, provided that any such policy of insurance must permit recourse by the
insurer against the person who breaches his fiduciary responsibility. Nothing in
this Article shall prevent the Company, at its own expense, from providing
insurance to any person to cover potential liability of that person as a result
of a breach of fiduciary responsibility.
13.9 Plan Records. The Savings Plan Committee shall maintain records
containing all relevant data pertaining to Participants and their rights under
the Plan. Records pertaining solely to a particular Participant shall be made
available to him for examination during business hours upon request.
13.10 Funding Policy. The Savings Plan Committee shall, at least
annually, estimate the amount of the benefit payments which the Plan will be
required to make, taking into account anticipated Participant retirements and
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terminations and all other relevant factors, and, on the basis of such estimate,
determine the Plan's need for liquidity. The Savings Plan Committee shall report
such determination in writing to the Trustee for consideration in the
formulation of the investment policy for the Trust.
ARTICLE XIV
TRUST FUND
14.1 Trust Agreement. Contributions to the Plan shall be put in trust
with a trustee or trustees selected by the Board of Directors, under a Trust
Agreement which shall provide that the Trust Fund is to be held, managed, and
disposed of by the Trustees in accordance with the terms of such Agreement.
14.2 Exclusive Benefit Rule. The Trust Agreement shall provide that no
part of the corpus of the Trust Fund or income thereon shall, at any time prior
to the satisfaction of all liabilities with respect to Participants and their
Spouses and Beneficiaries under the trust established under the Plan, be used
for, or diverted to, purposes other than for the exclusive benefit of
Participants or their Spouses or Beneficiaries (except as provided in Section
3.10); and it may contain such other provisions relating to the custody,
management, and disposition of the funds and assets of the Plan by the Trustees
as shall be deemed advisable by the Board of Directors.
ARTICLE XV
AMENDMENT, TERMINATION, MERGER AND SUCCESSOR EMPLOYER
15.1 Amendment
(a) Subject to subsections (b) through (d) below, this Plan
may be amended, by written resolution by the Board of Directors, at any time.
(b) No amendment shall reduce the accrued benefit of any
Participant. For purposes of this subsection (b), an amendment which has the
effect of (i) eliminating or reducing an early retirement benefit or a
retirement-type subsidy, or (ii) eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment, shall be
treated as reducing accrued benefits as provided in section 204(a) of ERISA.
(c) In the case of an Employee who is a Participant on (i) the
date the amendment is adopted, or (ii) the date the amendment is effective, if
later, no amendment shall cause the nonforfeitable percentage (determined as of
the date specified in (i) or (ii)) of such Participant's right to his Accrued
Benefit to be less than his percentage computed under the Plan without regard to
such amendment.
(d) No amendment shall cause the computation of a
Participant's nonforfeitable percentage to be directly or indirectly affected
unless a Participant with three or more Years of Vesting Service is permitted to
elect, within 60 days after the latest of (i) the date the amendment is adopted,
(ii) the date the amendment becomes effective, or (iii) the date written
notification of the amendment is issued to the Participant, to have his
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nonforfeitable percentage computed under the Plan without regard to such
amendment; provided, however, that no election shall be given to any Participant
whose nonforfeitable percentage under the Plan, as amended, cannot at any time
be less than such percentage determined without regard to such amendment.
15.2 Discontinuance and Termination. The Board of Directors intends to
continue the Plan indefinitely, but reserves the right at any time to
discontinue contributions to the Trust Fund under the Plan and to terminate or
partially terminate the Plan and Trust Fund. The discontinuance or termination
of the Plan by the Board of Directors shall not entitle the Company to the
return of any part of the Trust Fund or any part thereof set aside for
Participants pursuant to the Plan. If the Plan is terminated or partially
terminated or if contributions are permanently discontinued, the total amounts
then standing to the accounts of affected Participants in the employ of the
Company shall immediately vest.
Upon final termination of the Trust Fund, at such time as
shall be determined by the Board of Directors, the Savings Plan Committee shall
direct the Trustees to liquidate the assets held in the Accounts and, after
payment of all expenses and proportional adjustment of each Account to reflect
income or losses to the date of termination, to distribute the balance of each
Participant's Account to each Participant, retired Participant, or, if
appropriate, to the Participant's Beneficiary. The Trustees, at the direction of
the Savings Plan Committee, shall make payment of such amounts pursuant to
Sections 9.1 and 9.3, no later than the time prescribed for the commencement of
such payments provided in Section 9.5.
In the case of any distributee described herein at the time of
distribution upon termination of the Plan or Trust Fund whose whereabouts are
unknown, the Savings Plan Committee shall notify such individual at the last
known address by certified mail with return receipt requested advising such
individual of the right to such a benefit. If the distributee cannot be located
in this manner, the Trustee shall establish a savings account for the
individual's benefit in which the individual's Account balance shall be
deposited. Upon the distribution of all Plan assets, the Trustee shall be
discharged from all obligations under the Plan and Trust and no Participant or
Beneficiary shall have any further rights or claims thereunder.
Notwithstanding the foregoing, amounts credited to a
Participant's Before-Tax Contributions Account shall not be distributed prior to
the Participant's attainment of age 59 1/2, separation from service (within the
meaning of Article VI), Disability, death, or financial hardship (within the
meaning of Section 10.3), except as a lump-sum distribution to the Participant
or his Beneficiary as soon as administratively feasible after the termination of
the Plan, provided the Company does not establish or maintain a successor plan
(within the meaning of section 1165(e)(2)(B)(ii) of the Code).
15.3 Merger, Consolidation, or Transfer. This Plan shall not be merged
or consolidated with, nor shall any assets or liabilities be transferred to, any
other plan, unless the benefits payable to each Participant, if the Plan were
terminated immediately after such action, would be equal to or greater
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than the benefits to which such Participant would have been entitled if this
Plan had been terminated immediately before such action.
15.4 Successor Employer. In the event of the dissolution, merger,
consolidation or reorganization of a Participating Employer, provision may be
made by which the Plan and Trust Fund will be continued by its successor; and,
in that event, the successor shall be substituted for the Participating Employer
under the Plan. The substitution of the successor shall constitute an assumption
of Plan liabilities by the successor, and the successor shall have all of the
powers, duties, and responsibilities of the Participating Employer under the
Plan.
ARTICLE XVI
RELATING TO THE PARTICIPATING EMPLOYERS
16.1 Participating Employers. Any Affiliate, with the consent of the
Board of Directors, may adopt the Plan and become a Participating Employer
hereunder --
(a) by filing with the Board of Directors, the Savings Plan
Committee, and the Trustees a certified copy of a resolution of that company's
board of directors (or other governing body) providing for its adoption of the
Plan and stating its election to become a party to the Trust Agreement; and
(b) by filing with the Savings Plan Committee and the Trustees
a certified copy of a resolution of the Board of Directors providing for its
consent to such adoption.
16.2 Action by Board of Directors. Any action required or permitted to
be taken under the Plan by the Company shall be by resolution of the Board of
Directors or by a duly authorized committee of the Board of Directors or by a
person or persons authorized by resolution of the Board of Directors or of such
committee. Each Participating Employer appoints the Board of Directors as its
agent to exercise on its behalf any action required or permitted to be taken
under the Plan by the Company.
ARTICLE XVII
MISCELLANEOUS
17.1 Company Notification. The Board of Directors, or its delegate,
shall promptly advise the Trustees and the Savings Plan Committee, in writing,
of the death, retirement or separation from service of a Participant and shall
execute and deliver to the Savings Plan Committee such forms as may be required
to carry out the provisions of this Plan. At the proper time, the Savings Plan
Committee shall take appropriate action based on such notification and forms.
17.2 No Right to Employment. Participation in the Plan shall not be
deemed to be consideration for, an inducement to, or a condition of the
employment of any Employee. Nothing contained in this Plan shall be deemed to
give any Participant the right to be retained in the employment of the
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Company, nor shall any Participant, retired Participant, deceased Participant,
disabled Participant, or terminated Participant have any right to any payment,
except as such payment may be provided under the terms of the Plan, and then
only to the extent that assets are available under the Plan.
17.3 No Assignment or Alienation. To the extent permitted by law (and
except as provided in Article XI with respect to loans to Participants), the
benefit payable to a Participant, and the death benefit (if any) payable to a
Beneficiary, shall not be subject to alienation, assignment, attachment,
execution, garnishment, pledge, or encumbrance, or to any other legal or
equitable process. The preceding sentence shall also apply to a right to any
benefit payable pursuant to a domestic relations order unless such order is
determined to be a qualified domestic relations order ("QDRO") (as defined in
section 206(d) of ERISA) or a domestic relations order entered before January 1,
1985 which the Savings Plan Committee elects to treat as a QDRO. Benefits
payable to an alternate payee under a QDRO, or under any domestic relations
order entered before January 1, 1985 treated as such, may be distributed in such
manner and at such time as the order provides, even if earlier than the date on
which the Participant himself would be entitled to receive such benefits under
the Plan, and even if earlier than the Participant's "earliest retirement date,"
as defined in section 206(d)(3)(E) of ERISA.
17.4 Unclaimed Benefits. Except as provided in Section 15.2, any
benefits payable to, or on behalf of, a Participant or Beneficiary which are not
claimed for a period of five years after the later of the Participant's Normal
Retirement Date or the date he actually retires shall be forfeited and used to
reduce the Company's contributions for the year of forfeiture. Notwithstanding
the foregoing, if a claim is made by the Participant or his Beneficiary for the
forfeited benefit, the benefit shall be immediately reinstated.
17.5 Military Leave. An Employee or Participant who separates from
service with the Company for service in the U.S. Armed Forces shall be credited
upon his return, in addition to the credit for Hours of Service to which he is
entitled under Section 1.22, such other credit as may be prescribed by Federal
laws relating to military service and veterans' reemployment rights, provided
that he returns within the time prescribed by law for the reemployment of
veterans.
17.6 Titles. Titles of Articles and Sections are for general
information only and this Plan shall not be construed by reference thereto.
17.7 Pronouns; Number. Words used in the masculine shall be read and
construed in the feminine where they would so apply. Whenever appropriate, words
used in the singular shall include the plural and words used in the plural shall
include the singular.
17.8 Facility of Payment. If the Savings Plan Committee deems any
person incapable of receiving benefits to which he is entitled, by reason of
minority, illness, infirmity or other incapacity, it shall direct the Trustee to
make payment directly for the benefit of such person to any person selected by
the Savings Plan Committee to disburse it. Such payments shall, to the
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extent thereof, discharge all liability of the Company, the Savings Plan
Committee, and the Trustee.
17.9 Expenses. Unless paid by the Company, any expenses incurred in
administering the Plan, including but not limited to expenses incurred by the
Savings Plan Committee, shall be deducted from the Account(s) to which such
expenses relate, or proportionally from all Accounts if such expenses do not
relate to any specific Account(s).
17.10 Savings Provision. In the event that any provision of this Plan
or the application thereof to any person or circumstance shall be determined by
a court of competent jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Plan, or the application of such provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each provision of this Plan shall be valid
and enforced to the fullest extent permitted by law.
17.11 Governing Law. The Plan shall be construed, regulated and
administered according to the laws of the Commonwealth of Puerto Rico to the
extent not superseded by Federal law.
IN WITNESS WHEREOF, MCT CABLEVISION, LTD., as sole general partner of
MCT Cablevision, Limited Partnership, has caused these presents to be duly
executed this 2nd day of October, 1996.
Attest: MCT CABLEVISION, LTD.
/s/ William E. Miles III By: /s/ Robert N. Verdecchio
- ---------------------------- ---------------------------
William E. Miles III Robert N. Verdecchio
Senior Vice President
PHT 108319
100196
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APPENDIX A
APPROVED INVESTMENT FUNDS AS OF OCTOBER 1, 1996
The Pegasus Stock Fund
Government Securities Trust Money Market Series
Prudential Equity Fund, Inc.
Prudential Growth Opportunity Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Prudential Diversified Bond Fund, Inc.
Prudential Jennison Fund, Inc.
Prudential Global Fund, Inc.
<PAGE>
EXHIBIT 5(a)
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
March 5, 1997
Pegasus Communications Corporation
c/o Pegasus Communications Management Company
Suite 454, 5 Radnor Corporate Center
100 Matsonford Road
Radnor, Pennsylvania 19087
Re: Pegasus Communications Corporation
Securities and Exchange Commission
Registration Statement on Form S-8
------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Pegasus Communications Corporation (the
"Company") in connection with the preparation and filing with the Securities and
Exchange Commission of the Company's Registration Statement on Form S-8 under
the Securities Act of 1933 (the "Registration Statement") relating to 205,000
shares of Class A Common Stock of the Company, par value $0.01 per share (the
"Shares"), issuable pursuant to its Savings Plan (the "Savings Plan") and Puerto
Rico Savings Plan (the "Puerto Rico Savings Plan," and, together with the
Savings Plan, the "Plans").
In this capacity, we have reviewed originals or copies, certified or
otherwise identified to our satisfaction, of the Company's Certificate of
Incorporation, its By-laws, resolutions of its Board of Directors, the Plans,
and such other documents and corporate records as we have deemed appropriate for
the purpose of giving this opinion.
Based upon the foregoing and consideration of such questions of law as
we have deemed relevant, we are of the opinion that the issuance of the Shares
by the Company pursuant to the Savings Plan or Puerto Rico Savings Plan has been
duly authorized by the necessary corporate action of the Board of Directors of
the Company and such Shares, upon payment therefore, if applicable, in
accordance with the terms of the Savings Plan or Puerto Rico Savings Plan will
be validly issued, fully paid and nonassessable by the Company.
The opinions expressed herein are limited to the federal laws of the
United States and the Delaware General Corporation Law.
We consent to the use of this opinion as an exhibit to the Registration
Statement. This does not constitute a consent under Section 7 of the Securities
Act of 1933 since we have not certified any part of the Registration Statement
and do not otherwise come within the categories of persons whose consent is
required under Section 7 or the rules and regulations of the Securities and
Exchange Commission.
Very truly yours,
/s/ DRINKER BIDDLE & REATH
----------------------------
DRINKER BIDDLE & REATH
1
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EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Pegasus Communications Corporation of our report dated May 31, 1996,
except as to Note 14 for which the date is November 8, 1996, on our audits of
the combined financial statements and financial statement schedule of Pegasus
Communications Corporation as of and for the years ended December 31, 1994 and
1995, which report is included in this Registration Statement on Form S-1 (File
No. 333-18739).
/s/ Coopers & Lybrand L.L.P.
------------------------
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
March 4, 1997
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
Pegasus Communications Corporation (the "Company") on Form S-8 of our report
dated March 4, 1994.
/s/ HERBEIN + COMPANY, INC.
- ---------------------------
HERBEIN + COMPANY, INC.
Reading, Pennsylvania
March 4, 1997
3
<PAGE>
EXHIBIT 23(c)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Pegasus Communications Corporation (the "Company") on Form S-8 of our report
dated October 27, 1995.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
March 3, 1997
4
<PAGE>
EXHIBIT 23(d)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Pegasus Communications Corporation on Form S-8 of our report dated April 26,
1996, except for Note 9 as to which the date is October 8, 1996, on the DBS
Operations of Harron Communications Corp. appearing in the Registration
Statement of Pegasus Communications Corporation on Form S-1 (No. 333-18739).
/s/ DELOITTE & TOUCHE LLP
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DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
March 3, 1997
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